AST Stock Drops 11% on Low-Earnings Report

AST Research Inc.’s stock fell by 11% to close at $15.125 a share Wednesday after the company said that an ongoing price war in the computer industry will shrink its short-term earnings. The stock, which trades on the NASDAQ market, had been as high as $24.25 a share earlier this year.

Industry analysts said that AST’s announcement was further proof of the aggressive pricing that computer companies are using to increase sales. Alex. Brown & Sons and Bear Stearns & Co. on Wednesday lowered their investment ratings on AST to “hold” from “buy.”

While the pricing strategy will hurt short-term earnings, AST intends to build market share and improve longer-term profit margins, said Safi Qureshey, its president and chief executive. Also, Qureshey said, AST has hired “key management staff” to help alleviate shortages of components used in the company’s Bravo desktop and high-end notebooks.

Last month, AST reported $14.6 million in earnings for its latest fiscal quarter. That compared with a profit of $16.7 million for the same period a year earlier. Revenue for the three months ended Jan. 2 rose by 45% to $346.3 million.