Tv Or

Given a choice between two product lines, one thriving and the other struggling, most companies would have no problem deciding which one to embrace. But for Zenith, the decision was painful. The suburban-Chicago company surprised the high-tech industry last week by agreeing to sell its prosperous computer division to France's Groupe Bull for about $635 million. In doing so, Zenith, the last major U.S. maker of TV sets, decided to stake its future on that risky and supercompetitive business.

Heavily in debt, Zenith has reported losses in three of the past four years. Says Chairman Jerry Pearlman: "We are a highly leveraged company in two very tough businesses. We really felt we couldn't do either of them appropriate justice." Pearlman had tried to sell the company's TV division, but no buyers were willing to pay the reported $400 million asking price.

Zenith had expanded into computers to reduce its reliance on TVs, a business that low-cost foreign producers were beginning to dominate. The company bought the electronics-kit maker Heath in 1979 and expanded the division to include a line of laptop computers. Zenith's machines are now among the world's best sellers, bringing in about 60% of the company's revenues of $2.7 billion. With this deal, Bull will become the largest European-based computer maker.

The sale will virtually wipe out Zenith's debt and enable the company to invest in new technologies, including high-definition television. While HDTV is probably a decade away, Zenith is developing flatter, sharper TV screens that may keep the company -- and the U.S. -- in the race with Asian manufacturers.