AST Settles Suit Accusing Firm of Misleading Investors

AST Research Inc. has settled a shareholders lawsuit that accused the computer maker of misleading investors about the company’s earnings following its 1993 acquisition of Tandy Corp.’s personal computer manufacturing operations.

The settlement, the details of which are being kept secret until a federal court approves it Monday, was reached in mid-trial Aug. 17, as the plaintiffs neared the end of their case. A memorandum of understanding outlining the settlement was filed this week under seal.

“Under the circumstances, it’s a good settlement for the shareholders,” said Mark Rifkin, one of their lawyers.

Most of the case, he said, had already been dismissed by U.S. District Judge Stephen V. Wilson, and shareholders wound up taking only one issue to trial.

The company and its chairman, Safi U. Qureshey, refused to discuss the settlement, and their defense attorneys were unavailable for comment.

AST’s stock had leaped to $33 a share after it acquired the Tandy business for $175 million in July, 1993. But the following March, the stock began to tumble amid rumors of possible price cuts and troubles integrating the two operations. It hit a low of $12.875 a share three months later.

Shareholders who bought stock in the first nine months after the Tandy acquisition asserted at the trial that AST artificially inflated earnings by hiding reduced prices--in essence, lost profit--on its premier Premmia line.