AST’s Record Earnings Outdo Wall Street Forecast

Continuing to outperform Wall Street’s expectations, AST Research Inc. said Wednesday that its earnings rose to a record $35.1 million last year on a 17% increase in revenue.

The Irvine personal computer maker, which celebrated its 10th anniversary in business Wednesday, said earnings for its fiscal year ended June 30 were $35.1 million. The company lost $7.5 million the previous year.

Revenue rose 17% to $533.8 million, up from $456.5 million a year earlier.

Buoyed by the news, AST’s stock jumped $2.25 per share--a 11% gain--to close at $22.625 Wednesday in active over-the-counter trading, with more than 1.9 million shares changing hands.

Securities analysts said the strong performance reflects AST’s success in shifting toward the high end of the personal computer market.

Jay Vleeschhouwer, analyst with Bear Stearns & Co. in New York, said the company’s performance has exceeded Wall Street’s expectations for the past four quarters. He said he expects AST to perform well in the current quarter, which ends in September.

Benny Lorenzo, an analyst with Volpe, Covington & Welty in San Francisco, said the company’s performance was better than he expected for the fourth quarter.

“This market has been ruthless for computer companies, but AST stands out because they just keep rolling along with better earnings,” he said.

The company said its sales last year were also driven by strong international revenue, which accounted for 36% of sales, up from 32% a year earlier. International sales, which were especially strong in the Far East, accounted for 39% of total sales in the fourth quarter.

“The key marketing, product and international expansion strategies adopted during the year successfully contributed to this record financial performance,” said Safi U. Qureshey, president and chief executive.

Some other computer makers, such as Advanced Logic Research Inc. in Irvine, have said their sales have been adversely affected by a shortage of the Intel Corp. 386SX microchip. But Qureshey said AST has been unaffected by the shortage because it was able to secure an adequate supply of the chips before they became scarce.

The company, which also makes expansion board products to boost the performance of PCs, reported fourth-quarter net income of $15.2 million, a six-fold increase from $2.5 million in the year-earlier period. Revenue rose 23% to a record $151.8 million.

Analysts noted that the company also took steps to strengthen its balance sheet.

At year’s end, the company had $92.3 million in cash, contrasted with $18.5 million a year ago. Inventories were $73.5 million, compared to $91.6 million a year ago.

In June, the company redeemed $47.5 million in convertible subordinated debt, a move that will eliminate more than $4 million in future interest payments.

AST said that during the past year it introduced 12 new computer systems and three enhancement board products. Qureshey said the company expects to announce three significant products during the next year.

One of those products will be AST’s first portable laptop computer. Another will be a personal computer that will use multiple processors for faster calculation of data.

The company also plans to start production in August of a personal computer specifically designed for the Japanese market.

AST’S PERFORMANCE

In the fourth quarter ended June 30, AST Research Inc. reported earnings of $15.2 million as its revenues rose 23% to $151.8 million.

Figures are in thousands, except per share data.

4th Qtr 4th Qtr 12 Months 12 Months 1990 1989 1990 1989 Revenue $151,827 $123,454 $533,814 $456,520 Net income (loss) 15,208 2,482 35,067 (7,469) Per share $1.18 $0.21 $2.86 $0.64

Source: AST Research Inc.