AST to Make PCs for Digital Equipment : High-technology: In a deal worth up to $100 million, the company will help the computer giant fulfill a Navy contract.

By DEAN TAKAHASHI

June 21, 1991 12 AM PT

TIMES STAFF WRITER

IRVINE —

AST Research said Thursday that it will manufacture personal computers under a subcontract from computer giant Digital Equipment Corp. in a deal that could produce sales of $100 million for AST over three years.

Digital, based in Maynard, Mass., with $13 billion in sales, will buy AST computers to fulfill a contract to supply the U.S. Navy with computer equipment.

AST would be an original equipment manufacturer (OEM), which means that it would make a wide range of PCs for Digital upon demand. AST’s brand name would appear on the computers.

Digital has similar agreements with Ft. Worth, Tex.-based Tandy Corp. and Santa Clara-based Intel Corp. In May, Digital introduced a family of PCs that could be linked together in networks. Digital spokesman Jeffry Gibson declined to comment on whether Digital selected AST over Tandy and Intel.

“We are building product for Digital and will begin shipping this month,” said Gary Mullinix, director of OEM sales for AST.

Georgia Fountoulakis, an analyst at the investment banking firm of PaineWebber Inc. in New York, said the deal could give a healthy boost to AST’s OEM business, but she said it does not represent a departure from AST’s primary focus on direct sales to businesses and consumers.

“OEM is a small part of their business and will probably remain so,” said Fountoulakis. “They have targeted 54 different OEM opportunities around the world, but it doesn’t mean there is any shift in focus.”

OEM sales accounted for $41.4 million of AST’s $533.8 million in sales last year, or 7.7% of the company’s business. The company has several OEM contracts, including one with Dallas-based Texas Instruments Inc.

If Digital purchases the maximum number of PCs from AST, it would become AST’s largest OEM customer. Mullinix said he expects Digital to purchase about $100 million worth of AST computers.

However, Gibson said, Digital is not obligated to buy a minimum number of the PCs. AST stock closed at $22.25, up $1.75 in over-the-counter trading Thursday.