AST Becomes 4th-Biggest Personal Computer Maker : Technology: Company completes purchase of Tandy manufacturing unit. Expenses will result in loss for the year.
Closing a deal that makes it the nation’s fourth-largest personal computer maker, AST Research Inc. has now acquired Tandy Corp.’s computer manufacturing business, the companies said Wednesday.
AST disclosed that the acquisition, announced in May and valued at as much as $175 million, will result in a charge of as much as $125 million against quarterly earnings, giving the company a loss for its fiscal year ended June 30. The annual loss will be AST’s first since fiscal 1989, when the company lost $7.4 million.
“This decision to acquire Tandy’s PC business is as important as the one we made to go into the PC manufacturing business in 1986,” said Safi Qureshey, chief executive of Irvine-based AST.
The combined company will have roughly $2 billion in annual sales.
In Wednesday’s trading on the NASDAQ market, AST’s stock fell 87.5 cents a share to close at $15.125. Qureshey noted that a number of computer stocks besides AST’s were down for the day.
AST said the charge against earnings reflects estimated expenses for combining the Tandy and AST operations, including different corporate computer systems and product lines. Qureshey said more details about the restructuring, including any effect on the company’s employees, will be disclosed later.
The deal will add 2,200 employees to AST’s work force of 4,000. Earlier, AST announced it would not hire 500 Tandy employees. They were laid off. AST picked up 1,800 manufacturing employees at Tandy and its GRiD Systems subsidiary, 130 engineers and 270 administrative, sales and GRiD marketing employees.
AST said it purchased four Tandy manufacturing plants: three in Ft. Worth, Tex., where Tandy is based; and one in East Kilbride, Scotland. Those facilities will double AST’s manufacturing capacity.
For three years, AST will also supply computers to Tandy’s Radio Shack consumer electronics retail chain as well as its Computer City computer super-stores and Incredible Universe home electronics and appliance retail chains. AST will keep the GRiD and Victor brand names, while Tandy Corp. will keep the Tandy brand name.
AST will also add two research groups: one for the development of multimedia technologies, or those that combine computers with high-quality sound, video and graphics; and another for pen-based computing, or the use of penlike devices instead of keyboards to accept data.
AST will get 110 patents related to the two technologies. Qureshey said an additional 60 to 70 patent applications are awaiting approval by the U.S. Patent & Trademark Office.
