AST Research Says Its 1st Quarter Will Be Worse Than Expected
In a sign that new leadership, new products and a massive new advertising campaign have so far been unable to reverse a staggering financial slide at AST Research Inc., the company said its first quarter loss will be bigger than even the most pessimistic of earlier estimates.
The Irvine-based computer manufacturer did not offer a projection, but company officials said the first quarter loss is expected to surpass analysts’ estimates that the company would lose between $48 million and $67 million.
AST, which has been plagued by production problems in recent years, has already reported six consecutive quarterly losses totaling $324 million.
In a written statement, AST Chief Executive Ian Diery attributed the latest gloomy news to “excess competitor inventory in the channel, overall lower demand for PCs and greater pricing pressures than originally anticipated.”
He added that an industrywide slowdown in personal computer sales has forced AST “to take aggressive pricing actions” to clear out inventory of its business and portable computer lines in order to make way for a series of new products the company plans to unveil in the second quarter.
“We therefore anticipate that revenues will be below those achieved during the previous quarter, ended Dec. 30,” Diery said.
AST reported a record loss of $129 million on sales of $613 million for the December quarter.
Diery was not available for comment. He was hired at AST in November to replace former Chief Executive Safi U. Qureshey, who remains as the firm’s chairman.
The projected loss underscores AST’s inability to right itself even in the midst of concerted management and marketing efforts to rebound from past mistakes.
Last month, AST was one of the first computer manufacturers to roll out its spring line-up of multimedia PCs aimed at everyday consumers, and the company was quietly applauded by analysts for coming up with well-equipped machines at attractive prices. That achievement, however minor, was something the company had seemed unable to do in recent years.
Also, after relying on low-budget, word-of-mouth advertising campaigns for years, the company launched a multimillion-dollar media blitz a few weeks ago, including AST’s first television ads since 1988.
As AST’s losses have mounted, some analysts have questioned the company’s ability to rebuild its badly eroded market share. But Samsung Electronics, the Korean company that bought 40% of AST’s stock for $376 million last year, has helped AST secure $200 million in credit to provide a badly needed financial cushion for the troubled company.
The company made the announcement after stock markets closed. AST’s stock fell to a 52-week low of $5.50, down 18.7 cents per share, in Nasdaq trading.
