AST Gets Down to Business at Computer Show : Comdex: The Irvine PC maker uses big event in Las Vegas to get out the word that restructuring will put the firm back on track.
Though he no longer arrives early to set up displays for AST Research Inc., company Chairman Safi Qureshey still didn’t have much time for fun at Comdex, the massive computer trade show running through Friday.
Tucked away from the spectacle of acrobats, puppets and swirling strobe lights that other PC makers use to promote themselves on the convention floor, Qureshey and 40 other AST employees are spending the week in a back room reassuring suppliers, distributors and the trade press that a management restructuring underway will get the company back on track.
“There’s a lot of noise, but Comdex is still necessary,” Qureshey said. “Key customers still expect to meet with executives, even if the most important announcements aren’t (made) at Comdex” as in the past.
Along with announcing a $39.9-million first-quarter loss, AST last month said it will close its Fountain Valley plant, laying off 440 workers, and reduce its product line to help it overcome problems integrating its manufacturing operations.
But at Comdex, with an estimated 200,000 attendees, AST and its rivals are focused on their future, jockeying with each other for attention and orders.
Maintaining a good industry buzz is important to a publicly traded PC maker. Distributors and retailers that carry a limited number of brands will pick their inventory based on a company’s reputation and its ability to deliver timely products.
Reviving industry confidence could still be a tough sell for the Irvine-based PC maker. Other mid-ranked computer companies, such as Hewlitt-Packard Co. and Toshiba America Information Systems Inc. in Irvine are introducing sub-notebook machines much like those that AST earlier said it could not yet deliver.
Several new network server computers also were on display, leading analysts to expect price cuts that could reduce margins in a market segment that has helped keep AST afloat. And an alliance among IBM, Apple Computer and Motorola, which the companies have touted this week, could challenge the dominance of the Intel microprocessor chips on which AST bases its designs.
In interviews, AST officials insist the company will be able to recover on its technical merit.
AST could be helped through its current difficulties by its strong relationships with distributors, said Arthur Merkin, a marketing director for Merisel in El Segundo, which handles many AST machines.
“They’ve got a loyal following, and they’re well beyond the critical mass that they need to survive,” Merkin said in an interview at the Merisel booth. The higher profit margins AST gives its resellers will help reduce any fallout from interruptions in supply and delays in bringing out new products, he said.
Albert Pang, West Coast editor of Computer Reseller News in San Mateo, met with Qureshey on Wednesday along with two of his writers. He said the AST chairman stressed the company’s recent shuffle of several vice presidents as an indication of the depth of its restructuring.
“He (Qureshey) is a good guy, but it’s hard to tell when they’re going to rebound,” Pang said. “The (PC) markets have gotten so saturated that it’s hard to differentiate yourself.”
Qureshey, who has traveled to Las Vegas every year for the trade show since the early 1980s, said that he and company President Jim Schraith flipped a coin to determine who would make the trip this year.
Holding meetings in a subdued suite of conference rooms, AST executives spared themselves from the sales hype on the convention floor, which included:
* A 10-minute infomercial for the much-touted PowerPC chip from the IBM-Apple-Motorola alliance, which featured no technical descriptions of the ultra-fast microprocessor, but enough steam locomotives, athletes and fighter jets to equip the next several “Die Hard” sequels.
* The ubiquitous blue IBM cardboard briefcase giveaways carried by every other convention-goer by midweek.
* A little-league-size baseball stadium set up by Digital Equipment Corp., where attendees listened to a pitchman standing on a small pitcher’s mound and were asked to do “the wave” in return for T-shirts.
Despite the circus-like atmosphere, Comdex remains a must-do event for many executives, according to Charles Cortright, chief executive of Graphix Zone Inc. in Irvine, which was demonstrating several CD-ROMs with digitized music videos.
“There’s always a psychological factor that draws people here. If you’re a major player and you’re not at Comdex, that’s a sign of weakness and people will talk in your absence,” he said.
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Tom McGrew, vice president for research and development at Macro Educational Systems in Laguna Hills, said the show was worth attending “to meet the people here who you don’t know you might meet.”
The company had traditionally attended more software-oriented computer trade shows, he said, but was on hand as part of the display tent set up by IBM, Apple and Motorola.
Perhaps the only ones to stand apart from the mob were several Federal Communications Commission officials who manned a small booth in a corner, where they reminded computer manufacturers to build shields into their machines to ensure they do not to interfere with radio frequencies. They weren’t drawing much attention.
“Mostly we’re getting comments from people who are telling us what they think of Howard Stern, or when they don’t get through on an 800 number when they try to use the pay phones,” said Michael Marcus, an FCC engineer.
The FCC “did not think it was an appropriate use of taxpayer money” to buy banners or promotional buttons, Marcus said.
“However, we did cut loose and buy those two pots of flowers,” he said, gesturing at the yellow chrysanthemums behind him.
