Struggling AST Research Inc. has suffered another setback as Radio Shack, which accounted for 18% of the Irvine computer maker’s retail sales, signed an agreement this week to make IBM the featured brand this fall at Radio Shack outlets.
AST had been selling computers through Radio Shack stores since last fall as part of its effort to bolster sales by distributing products through national retail chains. AST had acquired the computer-manufacturing operations of Radio Shack’s parent company, Tandy Corp., for $112 million in 1993.
“We feel the name recognition of IBM’s personal computer division is more recognizable,” said Rick Borinstein, vice president of merchandising for Radio Shack. “We also believe that IBM’s strong customer support and highly trained sales associates will bring a new quality level to the company.” He said Radio Shack’s 6,500 retail locations will provide IBM entree to rural markets.
While the chain will still sell AST’s Ascentia line of portable computers, the deal Radio Shack announced Tuesday with IBM definitely will have an impact, said James Wittry, who heads AST’s North American sales operations. He said he was optimistic, however, that AST will be able to place its products with other chains.
AST is developing more sophisticated products for such outlets as Computer City, a 100-store chain, and Incredible Universal, a regional chain in the Pacific Northwest, Wittry said.
AST, the world’s fifth largest computer manufacturer, said last week that it lost $99.3 million in the last fiscal year while revenue rose slightly to $2.5 billion.