SCIENCE/TECHNOLOGY : 2 Announcements Blamed for Decline in AST, ALR Stocks
Jittery investors sent stock prices for Irvine-based personal computer makers AST Research Inc. and Advanced Logic Research Inc. falling on Monday, but each company said it is not troubled by the nervousness that triggered the selloffs.
Thomas Yuen, co-chairman of AST, attributed a 6% drop in price, to $26.875 a share, to two events: a downbeat forecast from chip-maker Intel Corp., which said on Friday that it expected lower demand for its chips in the third quarter, and Compaq Computer Corp.'s announcement Monday that it was introducing so-called upgradeable computers that represent the core of AST and ALR product strategy.
Yuen said that AST had anticipated Compaq’s entry into the upgradeable market for some time. With upgrades, a customer can snap in a relatively inexpensive add-on circuit card with beefed-up components to enhance a computer’s performance rather than having to replace the whole computer.
“Compaq is two years behind in introducing upgrades and they are focusing on a different piece of the market,” said Yuen, who noted that Compaq is building its upgrade strategy around computers based on Intel Corp.'s 486SX chip rather than the more popular but less powerful 386SX chip.
Yuen also said that his company isn’t changing its strategy despite the forecast of lackluster demand from Intel.
In addition to the news from Compaq and Intel, Charles Wolf, an analyst at First Boston Co. in New York, issued a report Monday that said AST’s profits could be hurt by a continued intensification of price wars in the computer industry.
David Kirkey, vice president of worldwide marketing at ALR, said he was pleased that Compaq adopted the upgrade strategy. He attributed a $1-a-share drop, to $12, to the Compaq announcement.
“Any time you find IBM or Compaq adopting a similar design, it’s a sign of acceptance for us,” Kirkey said.