Lower-Than-Expected Profit Drops AST Price : Computers: Shipment delays reduced O.C. firm’s earnings in fourth quarter.

AST Research Inc. on Wednesday reported a lower-than-expected fiscal 1994 profit and the personal computer maker’s stock paid the price.

The company said shipment delays in the fourth quarter pulled down that period’s earnings.

AST common stock fell by as much as $2.25, or 15%, by mid-morning before recovering to close at $13.75, down $1.25. About 3.2 million shares changed hands in the Nasdaq market, making the stock one of the most active issues on Wall Street.

The Irvine-based company posted a profit of $53.5 million, or $1.59 per share, for the year ended July 2. That contrasted with a loss of $53.7 million, or $1.72 per share, in the prior fiscal year, when AST took a $125-million restructuring charge to cover the purchase of Texas-based Tandy Corp.’s computer manufacturing business.

Bolstered by strong sales in North America and Europe, revenue for the latest fiscal year surged 68%, to $2.37 billion from $1.41 billion a year earlier.

AST, the world’s fifth-largest producer of personal computers, shipped 1.43 million units in fiscal 1994, up 78% from the previous year.

Nonetheless, the company’s earnings in the fourth quarter were shy of Wall Street estimates.

“It was not a good number,” said Thomas Rooney, an analyst at Donaldson Lufkin & Jenrette in New York.

Components problems at the company’s Fountain Valley plant delayed shipment of its new notebook computers from mid-June to mid-July, said Safi Qureshey, AST chairman. Profits also were clipped by the costs of a continuing realignment of manufacturing operations overseas, which included moving one production unit from Scotland to Ireland.

AST also has been moving production of printed circuit boards from Hong Kong to south China, and in the latest quarter the company sold its Hong Kong factory for $4 million.

The sale helped lift AST’s earnings in its fiscal fourth quarter to $14.1 million, or 43 cents per share. That contrasts with a loss of $87 million, or $2.76 per share, in the year-earlier period. Three-month revenue of $584.5 million was up 43% from $409.2 million a year earlier.

Sales in the consumer retail market were up sharply in the fourth quarter because of shipments to CompUSA, AST’s newest retailer.

Qureshey said AST plans to change its line of notebook and desktop computers in the next few months. And he said the company would also be introducing products in China. “For fiscal 1995, AST is very well-positioned for growth,” he said in an interview.

Analysts generally agreed. Rooney said AST has plenty of cash ($153 million as of July 2), a sound distribution system and now a better-aligned manufacturing operation overseas. “I think the pieces are all there.”

Ian Gilson, an analyst at investment bank L.H. Friend, Weinress, Frankson & Co. in Irvine, said he expects AST’s sales to grow 14% to 16% in its fiscal 1995. Virtually all of that growth, he said, is likely to come from outside of the United States.

Stock Slips

AST’s stock fell sharply after the computer maker posted lower-than-expected fourth-quarter results. Monthly closing princes:

Wednesday’s close: $15.00

Thursday’s close: $13.75

Source: Dow Jones; Researched by JANICE L. JONES / Los Angeles Times

AST’s Earnings

AST Research Inc. reported a profit of $53.5 million for its fiscal year ended July 2. That was a turnaround from a loss of $53.7 million for the previous 12 months. Earnings per share were $1.59, contrasting with a loss of $1.72 a share for the previous year. Figures in millions except data per share:

4th qtr 4th qtr 12 months 12 months 1993 1994 1993 1994 Revenue $409.2 $584.5 $1,412.2 $2,367.3 Net income (loss) (87.0) 14.1 (53.7) 53.5 Per share (loss) (2.76) 0.43 (1.72) 1.59

Note: 1993 earnings were affected by the 4th-quarter purchase of Tandy Corp.’s PC manufacturing operations.

Source: AST Research Inc.; Researched by JANICE L. JONES / Los Angeles Times