TECHNOLOGY : Compaq’s, Hyundai’s New Computers Pose No Worry to AST

AST Research Inc., a manufacturer of personal computers, is not worried about renewed competition from PC giants such as Compaq Computer Corp. and Hyundai Electronic Industries Inc.

Both Compaq and Hyundai on Monday announced new lines of computers and price cuts as deep as 40%. They vowed to compete with the fast-growing tier of so-called clone makers such as AST in Irvine, Dell Computer Corp. in Austin, Tex., and Gateway 2000 in South Dakota.

Safi Qureshey, co-chairman of AST, said Monday he is not concerned about the competition. AST, he said, has historically surpassed its rivals in competing for the low-cost segment of the market.

“Pretty soon, you may see Hyundai add steering wheels to its PCs,” he said in a swipe, suggesting that the South Korean company is preoccupied with its main business of manufacturing cars.

Ed Thomas, president of the U.S. subsidiary of Hyundai in San Jose, said the company’s computer sales have stayed flat at about $600 million for the last two years, making the company smaller than AST.

The Hyundai-Compaq announcements may be more significant to PC clone makers with a smaller comfort margin. One such company is PCC Group in Brea, a maker of PC Craft-brand computers.

Jack Wen, president of PCC Group, shrugged off Monday’s announcements. But he acknowledged that his firm is riding on razor-thin profit margins. For its fiscal year ended Sept. 30, PCC Group eked out a profit of $441,206 on sales of $63 million. That compared with a loss of $1.1 million on sales of $76.2 million for the previous fiscal year.

Wen said his company, which sells PCs manufactured in Taiwan and also distributes PC products, hopes to weather the price competition by carving out niches in multimedia PCs and multiprocessors. Multimedia PCs offer enhanced audio and video capabilities, while multiprocessors increase speed by using more than one main computing unit.

Wen acknowledged that the company is strapped for financing. Transamerica last week told PCC Group that it will extend the company’s $8-million line of credit through December. Thereafter, PCC Group will have to find a new lender.

In addition, Wen said, the company is seeking a private placement of about $5 million to $8 million for working capital.