Former Apple Executive Has His Work Cut Out at AST : Technology: The once-proud Irvine computer maker has hit hard times, and all eyes are now on Ian Diery as he tries to bring back the glory days.
It’s been nearly two months now since Ian Diery took the helm at AST Research Inc., but employees got their first good look at him less than two weeks ago during a meeting in the courtyard of the company’s headquarters.
“I want you to look forward and fix this company to a model that will work in the coming years,” Diery told the 600 engineers, salespeople and others gathered around him. “I don’t want you to look backward.”
These days, that would be too painful.
The once-proud Irvine computer manufacturer has lost market share, top executives and about $196 million over the past five quarters. Things got so bad that co-founder and longtime Chief Executive Safi Qureshey stepped aside last month to give the reins to Diery, a former Apple Computer executive.
The hopes of AST employees and investors alike are riding high on Diery, who ended the company meeting by donning an “AST Team Turnaround” T-shirt and helping to lead workers in pep rally-type cheers.
But the obstacles he faces are daunting.
AST is expected to be the only company among the top 10 computer manufacturers to post a year-to-year decline in U.S. shipments this year, and its share of the domestic market has shriveled from 3.9% a year ago to just 2.5%.
The company ranked seventh a year ago with shipments of 721,000 computers, but that number is down 21% this year to 566,000, and AST now ranks 10th, according to International Data Corp., a Massachusetts-based research firm.
Indeed, AST isn’t even tops in Orange County anymore. Toshiba’s Irvine subsidiary, which makes only notebook computers, is expected to ship 154,000 more units in the United States than AST this year, a stunning reversal.
Perhaps more worrisome for Diery is the erosion of the AST brand name. Just two years ago, consumers were willing to pay a premium of $176 for the AST name, according to a survey by IntelliQuest Inc., a Texas research firm. Today, consumers say they would pay just $17 extra for the AST name.
In contrast, consumers say they would pay a premium of $339 for IBM, $318 for Compaq and $182 for Apple.
“There’s no doubt that the value of our products has deteriorated perception-wise in the last year or two,” Diery, 46, said in a recent interview. “But with the same products, we’re growing like crazy internationally.”
That means AST’s products aren’t the problem so much as the company’s inability to ship them on time and market them effectively, Diery said. Analysts, who say AST has done little to differentiate its products from rival machines, aren’t so sure.
Former colleagues say Diery is a “salesman’s salesman,” a decisive leader who can instill the discipline Qureshey was unable to provide. His turnaround strategy centers on execution--”being first to market with leading edge products,” as he says.
So far, he’s been impressive. Just last week, he got a $200-million line of credit from Samsung Electronics--AST’s largest shareholder--in a deal that was far sweeter than one the companies had struck during preliminary negotiations a month ago.
If AST is going to climb back, its relationship with Samsung is certain to be the key. The $200 million gives AST some breathing room, but Diery is already pressing for an even tighter relationship in which AST would be first in line for monitors, memory products and other computer components built by Samsung, a giant Korean electronics company.
“They’re a huge reservoir of technology,” Diery said, and one AST must tap.
AST employees said they walked away from the company meeting with more energy and confidence than they’ve had in a long time. “There was a mood of hope,” said company spokeswoman Camerone Welch-Thorson. “This guy is charming, he’s smart, and he’s not afraid to put his foot down.”
