$7.2-Million Loss Reported by AST for Third Quarter : Earnings: Revenue is up from a year ago, however, and analysts express confidence that computer manufacturer is making right moves.
Computer maker AST Research Inc., still struggling to recover from sluggish sales and manufacturing problems revealed late last summer, marked its third consecutive quarterly loss Tuesday by posting $7.2 million in red ink for the three-month period that ended April 1.
The loss of 22 cents a share was an improvement over each of the last two quarters but a big drop from its profit of $13.2 million, or 38 cents a share, for the fiscal third quarter last year.
The loss was slightly more than Wall Street had expected, but analysts said they feel confident that the company is doing what is needed to recover. They were encouraged that AST’s quarterly sales of $670.2 million had outstripped last year’s third-quarter revenue of $591.3 million.
Tuesday’s report “wasn’t any kind of ground-breaking, ‘Here we are!’ thing,” said Stephen Dube, an analyst with Wasserstein Perella Securities in New York. “But it was solid.”
AST, the world’s sixth-largest personal computer maker, still faces the difficult task of increasing its revenue and market share as it recovers profitability, Dube said. If the company fails to record a profit in its current quarter, executives would face serious pressure from investors, he said.
“It would be a fairly significant problem, if they didn’t make it,” agreed Barry Willman, an analyst with Goldman, Sachs & Co., in New York.
AST’s stock fell 50 cents a share Tuesday to close at $17.375 a share in Nasdaq trading.
The company has lowered its losses so far by cutting the number of models it sells, which also reduced component costs, and by improving coordination between its sales force and its scattered manufacturing units, said Safi Qureshey, AST’s chief executive.
For its fiscal nine months, the company lost $69.4 million, or $2.15 a share, compared with net income of $39.4 million, or $1.18 a share, for the same period a year ago. Revenue remained flat at $1.8 billion for the nine-month period.
AST expects a cash infusion of $250 million and a loan guarantee of $75 million in a deal it reached with Samsung Electronics Co. The Seoul-based electronics giant will gain a 40.25% stake in AST if the deal is approved by AST shareholders and the South Korean government.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Another Loss at AST
Irvine-based AST Research posted a loss for the third quarter ended April 1, despite a 13% increase in revenue from the same period a year ago. Revenue and net income, in millions:
FY 1995 (3rd qtr.): $670.2
Net Income
FY 1993 (4th qtr.): $-87.0*
FY 1995 (3rd qtr.): $-7.2
* Reflects purchase of Tandy Corp.’s PC manufacturing operations
Source: Bloomberg Business News, AST Research; Researched by JANICE L. JONES / Los Angeles Times
