Exit of AST Co-Founder Rocks Computer Industry

In a jolt to the computer industry, AST Research co-founder Thomas C. K. Yuen abruptly resigned Monday as co-chairman and chief operating officer after an apparent dispute with the company’s board.

Yuen--the T in AST--was one of three immigrant engineers who founded the personal computer manufacturer in 1980 and built it into a Fortune 500 company.

Yuen’s departure is similar to the sudden resignation of co-founder Albert Wong in November, 1988. Wong, who was AST’s chief technology officer and reputedly a brilliant engineer, resigned after an argument with Yuen and Safi U. Qureshey, the third AST co-founder and the company’s chief executive and president, about the launch of a new computer.

AST stands for the first names of the three founders.

A Hong Kong immigrant, Yuen overcame great odds to start AST and transform it from a garage shop to one of the nation’s most successful personal-computer “clone” makers. He will remain a company director but will give up his daily management duties, AST officials said Monday.

Qureshey, 41, will assume Yuen’s day-to-day management duties and will give up his title as co-chairman. Carmelo J. Santoro, 50, a veteran of Orange County’s semiconductor industry and an outside director of the company, becomes chairman.

Yuen’s resignation rocked the technology industry. Analysts and former employees said indications from management suggest that Yuen, 39, was asked to leave because of his tough management style. They also interpreted the departure as a new stage in AST’s development.

“I think it’s a sign they are becoming a big company,” said Andrew Neff, a computer industry analyst at Bear Stearns & Co., a New York investment bank.

“AST tended never to be trendy, never tried to copy Compaq (Computer Corp.),” Neff said. “As a result, they tended to do well.”

Despite the announcement, AST’s stock rose 62 cents a share Monday to close at $13.50 in trading on the NASDAQ market.

Qureshey said in a statement that the announcement of the transition was timed to coincide with the end of AST’s fiscal year today. The company, he said, will use the occasion to “assess our strengths, expand our management capability and enhance our position in the marketplace.”

Santoro, chairman of Silicon Systems Inc. in Newport Beach, would not comment on analysts’ speculation that Yuen left because of disputes within AST.

He said Yuen’s departure was a consequence of an internal review of the company’s future direction that he and outside board member Richard Goeglein conducted during the last several months. The review was requested by Qureshey and Yuen.

“We presented our recommendations to the board of directors about a week ago,” Santoro said. “This action is one result of that.”

Although Yuen suffers from a painful kidney ailment, Santoro said, his departure has nothing to do with health. Rather, he said, it is based on recommendations he had made about the management of the company, where it should be going and the direction of the computer industry.

Ian Gilson, an analyst at L.H. Friend, Weinress & Frankson in Irvine, said, “I always thought it was unusual to have a company with co-chairmen. This more clearly defines lines of authority.”

Yuen had a reputation in industry circles as a marketing maverick who was responsible for AST’s meteoric rise from a three-man garage outfit in 1980 to a company with $688 million in sales for its 1991 fiscal year.

“Tom was the best intuitive marketing man,” said James Ashbrook, a former AST marketing executive who is now president of a software company in Sunnyvale. “He could sense the changes in the PC market and act.”

Ashbrook and others credit Yuen for knowing that the company had to exit its original business, making add-on components for the PC, because of fierce price competition. In 1986, the company began making clone computers.

The company slipped into losses and layoffs shortly after Wong’s departure but under the leadership of Yuen and Qureshey, it recovered to become one of Wall Street’s darlings.

The company quickly moved into different distribution channels with a variety of computer brands. That strategy allowed it to compete for all types of computer buyers, from corporate accounts to home PC owners.

Wong, who now runs a smaller PC company, Amkly Systems Inc. in Irvine, said Monday of Wong’s resignation: “I feel sorry it’s happening. Even though I was bitter in my departure, I think Tom brought the company to a new stage and made a lot of things happen inside.”

Wong expressed disappointment that Yuen was apparently ousted by an outsider, Santoro, who had little previous involvement with AST’s operations.

Santoro, however, said he is familiar with the industry. Wong also said he thinks Yuen knows more about running the company than Qureshey, who has adroitly handled AST’s relations with the outside world: customers, Wall Street, the news media.

Michael Morand, vice president of marketing at AST, said the company will be “streamlined” in the hands of a single chief executive.

Qureshey, he said, had responsibility for engineering and finances, while Yuen was responsible for marketing. But both men participated in the day-to-day decisions in all departments during the past year, he said.

As a result, analysts predicted, AST will not suffer a leadership transition because of Yuen’s departure. Employees, who were told of Yuen’s departure in a memo delivered at noon on Monday, were surprised.