Profit for 1st Quarter Nearly Quadruples, AST Research Reports

Despite recession fears that have hurt some personal computer makers, AST Research Inc. reported Wednesday that its first-quarter earnings nearly quadrupled to $11.4 million, up from $2.9 million a year earlier.

Revenue for the quarter ended Sept. 30 rose 19% to $136.3 million, compared to $114.5 million a year earlier.

The earnings report received a strong welcome on Wall Street, as AST’s stock rose $1.50 per share to close Wednesday at $16.50 in active over-the-counter trading.

“It was a very fine performance, considering the concerns everyone has about the downturn in the economy,” said James Poyner, an analyst with William K. Woodruff & Co. Inc., a Dallas investment firm. Poyner said AST’s earnings exceeded his expectations.

Safi Qureshey, AST’s chief executive, said the company “sees opportunity in a recession since some of the weaker players may start shrinking in sales because they cannot get capital or credit. That may give us an opportunity to increase market share.”

Qureshey attributed the sales growth to strong sales of the company’s top-of-the-line computers. Sales of the company’s line of high-performance PCs, based on the Intel Corp. 80386 and i486 microprocessors, accounted for more than 65% of first-quarter sales.

“So far, we have not seen any lack of interest in our product lines or the approach we are taking to the market,” Qureshey said.

AST’s international sales accounted for 38% of first-quarter sales contrasted with 30% a year earlier. European sales rose 44%, while Pacific Rim revenues increased 88% over the sales achieved in the first quarter of fiscal 1990.

Joel Don, a company spokesman, said most of the Pacific Rim sales of $24.6 million came from China. AST is now beginning to make computers that will be sold in Japan to compete against NEC Corp., whose computers are the de facto standard in the Japanese PC industry.

Separately, the company confirmed that the head of AST Japan, Shuji Sugimoto, quit last August. But Qureshey said the venture is moving ahead on schedule.

Qureshey said he expects to announce distribution agreements soon for the company’s PC-Dual SX/16, which is unique in that it is compatible both with the NEC standard and the International Business Machines Corp. standard.

AST PROFITS UP SHARPLY

Based on the strength of its high-end personal computers, AST Research Inc. reported record earnings of $11.4 million on revenue of $136.3 million for its first quarter ended Sept. 30, compared to net income of $2.9 million on revenue of $114.5 million

(Dollars in thousands, except per share data)

Percent 1990 1989 Change Total revenue $136,286 $114,496 19.0 Net earnings $11,408 $2,854 393.1 Earnings per share $.74 $.24 208.3

Source: AST Research Inc.