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Beleaguered Qureshey Stepping Down at AST : Computers: Irvine firm’s co-founder to be succeeded as CEO by former Apple exec but will continue as chairman.

TIMES STAFF WRITER

The other shoe finally dropped at AST Research Inc. on Thursday as beleaguered co-founder Safi Qureshey said he will step down as chief executive officer in favor of former Apple Computer executive Ian Diery.

In addition, AST said it reached a tentative agreement with partner Samsung Electronics under which the Korean electronics giant will provide up to $100 million in credit to AST in return for control of the board of directors and an increase in its 40% stake in the company.

The two moves came as the computer manufacturer reported a whopping $96-million loss for the first quarter, nearly equal to the $100-million loss it reported for all of last year.

Qureshey will remain chairman, but he will no longer manage the company’s day-to-day operations, and will primarily be responsible for the company’s long-term strategies.

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“Today represents a turning point in AST’s history,” said Qureshey, who had been blamed for a series of management missteps that threatened to unravel the company before Samsung came to the rescue with a $378-million cash infusion last year.

The hiring of Diery, 46, formerly head of Apple’s Personal Computer division, means that for the first time AST will not be led by any of the three engineers who founded the company in July, 1980, and whose first initials combined to form the company’s name.

Albert Wong and Thomas Yuen were forced out of the company in recent years. Qureshey has served as chief executive since the very beginning, but he said his decision to step down was not a sad one.

“This is probably my most satisfying and happiest day,” Qureshey said in an interview Thursday. “As a co-founder, you want to see your organization grow. We were able to bring this company to $2.5 billion [in annual sales]. We also recognized our limitations, and we believe we have found the best executive in the industry for AST.”

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Diery had been at Apple for six years, having led the company’s domestic sales organization and hardware business. But he resigned in April after losing an internal struggle with Apple’s chief executive, Michael Spindler.

In an interview Thursday, Diery acknowledged that AST has many weaknesses but expressed confidence that the company can reverse a long slide that led to 450 layoffs in Orange County last year, erosion of the company’s market share and the departure of five top executives over the past two months.

“This situation can be turned around,” Diery said. “If I didn’t believe that I wouldn’t be here.”

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He said one of his top priorities is to improve AST’s ability to get products to market on time. The company has been plagued in recent years by product introduction delays that cost AST dearly in an industry with very short product life spans.

“Sixty to 70% of the profits of a product line is realized in the first four to five months of a product life cycle,” Diery said. “We’ve got to be quicker to market with our products, and distribution in the United States needs to be improved.”

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A sharp drop in the company’s U.S. sales was behind the company’s steep financial drop. AST’s $96-million loss in its first fiscal quarter compared to a loss of $39.4 million in the same quarter a year earlier. The company’s revenue tumbled 10% to $410 million from $458 million a year earlier, even though the PC market as a whole has been enjoying growth of more than 20%.

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The company’s sales in North America fell 42% in the first quarter, offsetting a 28% rise in international sales.

Analysts supported what they called an overdue management change at AST, but said the rapid drop in sales means the company has far more to worry about that containing costs and increasing efficiency.

“One person is not enough,” said Scott Miller, an analyst at Dataquest Inc. in San Jose. “We still need to see how Diery and Safi fit together, and who these two surround themselves with. I can only assume there will be other moves.”

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The changes in AST’s relationship with Samsung suggest that company will be playing a much larger role. In connection with the new credit arrangement, Samsung’s interest in AST would increase to as much as 49.9%, and the company would add two new directors to AST’s board, which currently has 11 members, the company said.

The two companies also agreed to negotiate further arrangements that could lead to Samsung taking a 60% stake in the company.

Qureshey said the board changes are likely to come before the end of the year, and that part of his new role will be to achieve a broader cooperation between the two companies.

“There are so many resources at Samsung that each time I go to Korea I find something new,” he said. “The more quickly we can bring that expertise, the quicker we can succeed in the marketplace.”

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Some analysts questioned whether, given the changes in the relationship with Samsung, Diery will have the freedom to make changes in the company. Diery said he had the same concerns when he was approached for the job about a month ago, but added that he was reassured by meeting with senior Samsung officials.

“They want me to run the company,” said the Australian-born Diery.

AST announced the changes and first-quarter results late Thursday, after financial markets had closed. The company’s stock price closed at $9.375, up 75 cents, in Nasdaq trading.

* SALESMAN’S SALESMAN: New AST boss was well liked by Apple colleagues. A20

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