AST’s Fortunes Keep Going Up in Down Industry : Computers: The Irvine PC maker again registered impressive gains in annual earnings and revenue while major competitors took big hits.

Continuing to outperform a personal computer industry mired in a deep slump, AST Research Inc.’s earnings shot up 84% to $64.7 million last year, while revenue jumped 29% to $688.5 million.

“We are very pleased with the results . . . especially considering the downturn in the economy and financial difficulties experienced by others,” said Safi Qureshey, AST co-chairman and chief executive.

Qureshey attributed the higher earnings to the success of several new products and more efficient manufacturing and financial controls that kept profit margins from shrinking during the recession. The company also expanded distribution in the U.S. and overseas markets.

AST’s earnings for its fiscal year ended June 30 were $2.13 a share, compared to earnings of $35.1 million, or $1.21 a share, a year earlier.

AST also said Thursday that it plans to begin manufacturing PCs in Europe sometime during its current fiscal year to take advantage of economic unification in Western Europe in 1992. The company is considering sites in Ireland, Scotland and Belgium, Qureshey said.

AST stock closed Thursday at $24.50 a share, up 25 cents in over-the-counter trading.

For the fourth quarter ended June 30, AST’s earnings increased 34% to $20.4 million, or 64 cents a share, compared to $15.2 million, or 49 cents a share, a year earlier. Sales rose 39% to $211 million, up from $151.8 million.

Those results are in sharp contrast to a dreary second-quarter report Tuesday by Compaq Computer Corp., which suffered an 81% drop in earnings. International Business Machines Corp. and Apple Computer Inc. have also reported poor results recently.

Like Compaq, AST owes much of its success to sales to large corporations. Because of smaller rivals like AST, Compaq recently slashed prices on its computers.

“The larger guys have been slow to change,” Qureshey said. “They have not been sensitive to what the market has been telling all of us: It wants aggressive products that meet (customers’) needs and aggressive pricing.”

AST said its sales were helped by the success of its notebook-size computer, which accounted for 9% of the company’s revenue last year. The company has shipped 27,000 of the machines since their introduction in January.

“The market is more price-sensitive, and it is going to AST because of that,” said Daniel Benton, an analyst at Goldman, Sachs & Co. in New York “They’ve done an outstanding job of preempting the market with key, well-placed product introductions.”

Besides the notebook computer, Benton said AST’s high-end line of PC workstations, which can link multiple computer users in corporate networks, has boosted earnings. AST shipped 11,000 of the systems in the fourth quarter.

While competitors have been weakened by the recession, AST is standing out in the crowd. But a rivalry is shaping up between AST and Dell Computer Corp., an Austin, Tex., company that relies on mail-order sales, as the runner-up to industry giants IBM, Apple and Compaq.

Dell reported sales of $546.2 million for its fiscal year ended Feb. 3.

Qureshey said AST sells twice as many computers as Dell, noting that Dell’s sales include a variety of printers and other equipment. Dell officials could not be reached for comment.

“In the strategic markets, we think we are out-shipping them,” Qureshey said. “If you’re talking about who is the No. 4 company, most people would say AST has the stronger market share.”

Earlier this year, J. D. Power & Associates in Agoura Hills ranked Dell No. 1 and AST No. 3 in a survey of overall customer satisfaction.

“Of all the second-tier players, those two have established themselves as being market leaders in quality and technology,” said Marcia Sanford, an analyst at Dataquest Inc., a market research firm in San Jose. “But I wouldn’t say they will catch up real soon.”

Benton expects AST’s sales to hit $940 million, and possibly $1 billion, in the current year, with earnings of about $80 million.

AST ON A ROLL

Gaining on its competitors despite the recession, Irvine-based computer maker AST Research Inc. reported that its earnings for the 1991 fiscal year ended June 28 climbed 84% to $64.7 million from $35.1 million a year earlier. Sales rose 29% to $688.5 million, up from $533.8 million a year earlier.

Sales (In thousands of dollars) 1987: $205,962 1988: $412,721 1989: $456,520 1990: $533,814 1991: $688,477

Earnings (In thousands of dollars) 1987: 13,032 1988: 15,071 1989: -7,469 1990: 35,067 1991: 64,724

Source: AST Research Inc.