Diery Gets an Early Start on Touting AST’s Chances : Computers: Troubled Irvine-based computer firm’s new chief executive seeks to reassure industry analysts and employees.
At 5:30 p.m. Friday, after 12 hours at AST Research Inc.’s headquarters, Ian Diery is still energized.
Talking almost nonstop, the Australian-born executive is excited about the prospects of turning around the money-losing Irvine computer maker.
He arrived early to tell industry analysts on the East Coast that the company can be revived. He gave a pep talk to employees nationwide in a telephone broadcast. He reviewed pending plans for rebuilding the company, and added a few modifications. He even went out to look for an apartment.
So much for his first day as president and chief executive, taking over the latter position from company co-founder Safi U. Qureshey.
Diery’s job is monumental. AST’s market share has slid precipitously in the last year as it lost U.S. sales and laid off 450 employees.
A year ago, AST was the world’s fifth-largest computer maker and its quality was highly regarded. But today, the company has fallen out of the top 10, according to a survey soon to be released by Dataquest Inc., an industry information services firm in San Jose.
While well-known in Orange County as a major employer, it has done little to foster brand-name allegiance nationwide as consumers turned to less expensive models.
“I don’t see why they should be in business,” said Udaya Chandra, manager of the ComputerLand store in La Mirada. “They’re not adding any value. They’re not big. And there’s enough other companies out there with much better products.”
Sales of AST computers at his store, he said, are “slim to none.”
Diery understands the problems he faces.
“They have [manufacturing] processes here that have not worked, and they have not brought their product to market quickly enough,” he said. “When that happens, it cascades into all sorts of problems. That’s something I’ve fixed before and think I can fix here.”
Diery, who said he balked at first when asked to take the job, spent two weeks talking to line managers and others to obtain more details about the problems and the prospects of correcting them.
“I became more impressed with the strength of the company,” he said. “I firmly believe it could be turned around.”
He’s basing his belief on AST’s known product quality, its engineering capabilities and its relationship with Samsung Electronics, the South Korean conglomerate that acquired 40% of AST last summer with a $378-million investment.
He said he’s looking to Samsung to provide a steady stream of computer components and avoid a manufacturer’s biggest headache--delays in the chain of supplies. “By being able to work with Samsung, we can shrink supply time and help us to react to market conditions more quickly,” he said.
He won’t predict when the company will return to profitability, but he said he expects to get the company’s turnaround plan implemented in the next two to three weeks.
Diery, described by former colleagues as a salesman’s salesman, will need to crack the whip not only with AST’s sales force but with its production line as well. The company’s money-losing ways have been a result mainly of getting to market too late too often with products that are dated.
In announcing Diery’s hiring Thursday, the company also revealed that it lost $96 million for its fiscal first quarter, which ended Sept. 30.
The losses forced it last summer into the arms of Samsung Electronics.
With the promise of providing loans up to $100 million, Samsung is poised to take control of AST’s board and 49.9% of the stock. Pending negotiations also could let Samsung raise its stake in AST to 60%.
Such negotiations make AST’s future as an independent computer maker uncertain, but many observers already consider it a Samsung operation. Even so, AST feels confident that its 6,500 employees worldwide, including 750 at its Irvine headquarters, will remain intact.
“I think it’s possible to turn the company around,” Scott Miller, a Dataquest analyst, said. “It’s not going to be easy, and it will need to work out a plan with Samsung. Someone has to foot the bill while the company is being reworked.”
Wall Street, apparently, is encouraged by Diery’s hiring and may wait to see what he can do. AST stock gained 50 cents a share to close Friday at $9.875 a share in Nasdaq trading.
