AST Changes Chief Executive Ranks Again

Still struggling to get a grip on the problems plaguing AST Research Inc., the computer maker’s largest shareholder has installed another new chief executive.

Samsung Electronics Co., which is acquiring AST, has named longtime Samsung executive Soon-Taek Kim, 48, as chief executive. He succeeds former Samsung executive Young Soo Kim, who resigned after only eight months on the job at AST, citing “personal reasons.” Young Soo Kim will remain a member of AST’s board of directors.

Several sources said that Young Soo Kim, 63, recently developed health problems.

But at least one industry observer suggests that it is no coincidence that his departure comes just days after AST announced it will lay off 25% of its work force--about 1,000 employees--in the wake of a $110-million first-quarter loss that followed a 1996 loss of $418 million.

“This is a polite way of saying he hasn’t done what Samsung wanted him to do,” said analyst Ian Gilson of the Van Kasper & Co. brokerage in Los Angeles.

Officials at AST would not comment on Young Soo Kim’s resignation. A spokesman said the new chief executive told employees Monday morning that he intended to follow his predecessor’s game plan to focus on computers for mid-size businesses and for the low end of the consumer market. Kim also said he would keep the company headquartered in Irvine.

The company needs a focus, said Kevin Hause, a Silicon Valley-based PC industry analyst with International Data Corp. By the time Samsung bailed out AST with a $378-million cash investment in early 1995--the first of several rescues--the computer manufacturer was “trying to cover all of the consumer bases plus the commercial market and was trying to do it all over the world,” Hause said.

Samsung’s stake in AST is sizable. The giant Korean conglomerate already has invested more than $700 million in the company and owns 49.9% of the computer firm’s stock.

Last week, Samsung also began a tender offer aimed at buying up the rest of AST’s stock. The deal calls for Samsung to spend almost $475 million more to acquire the company, including $167.4 million cash for the stock, at $5.40 a share, and the assumption of $307 million in debt.

Appointing Soon-Taek Kim president and chief executive of AST solidifies Samsung’s control. Kim, who uses the initials S.T., had been chief executive of Samsung Heavy Industries and before that was vice president of the Samsung Group executive staff, reporting directly to Chairman Kun-Hee Lee. He is a 12-year veteran of the company, which he joined after graduating from college in Korea with a bachelor’s degree in economics.

Kim is AST’s third president and chief executive in 18 months.

The company has been losing money and market share steadily for the last three years--a victim of management turmoil and poor timing that has kept it a yard or two behind the competition in an industry in which the race usually is won by mere millimeters.

S.T. Kim’s job, analysts said, will be to staunch the financial hemorrhaging by downsizing the company’s manufacturing capacity to match the diminished demand for its goods, and then to build AST back up by improving its marketing and reestablishing its ability to hit the market with new or upgraded products before most of the competition does.

When AST acquired the computer manufacturing assets of Tandy Corp. in May 1993, the company was looking toward a 15% share of the market for personal computers, including highly profitable laptops. Instead, its share has fallen steadily to about 5% and it is no longer considered a player in the laptop market, analyst Gilson said.

AST was founded in 1980 by engineers Albert Wong, Safi Qureshey and Tom Yuen, whose first initials formed the company’s name.

Paced by innovative design and marketing, AST quickly rose to the top echelon of the world’s personal computer makers. But the three founders became caught up in internal disputes that disrupted things for years.

Finally, only Qureshey was left. While he is admired as an exemplary entrepreneur and computer industry visionary, he admits that day-to-day management was not his strength. As a result, the company began slipping and competitors began getting their products to market before AST’s.

Qureshey stepped down as chief executive in November 1995, turning the reins over to longtime computer industry executive Ian Diery. In August, 1996, Samsung replaced him with Y.S. Kim, who criticized Diery for not using all the resources that Samsung was offering to help reverse AST’s slide.

Samsung and AST now are touting S.T. Kim as a turnaround specialist who has worked his magic with several Samsung divisions over the years.

In a statement issued Monday, Kim said his first priority at AST will be “to restore confidence in AST among our customers, vendors and employees as AST and Samsung continue to work together to complete the pending acquisition.”

AST stock closed Monday at $5.156 a share, down 3.125 cents, in moderate trading on the Nasdaq market.

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The Revolving Door at AST

A look at Soon-Taek Kim, AST Research’s new president/CEO, and the five who have preceded him as president since 1994:

Safi U. Qureshey

1 One of three founders, held the titles of chairman, president and chief executive as recently as 1994. He first surrendered the title of president that year, then gave up the chief executive position in 1995, and departed as chairman last year. He currently is chairman emeritus and a member of the board of directors.

James T. Schraith

2 Veteran AST executive tapped by Qureshey to become president/chief operating officer in 1994. Held the position for 14 months, resigning in a management shake-up. Before becoming the No. 2 executive, he had served in a number of positions, including senior vice president of sales and service operations.

Ian Diery

3 Former Apple Computer executive, appointed AST president/CEO in November 1995 and replaced less than a year later by a Samsung executive.

Kwang-Ho Kim

4 Samsung Americas chairman who replaced Qureshey as chairman of AST in 1996.

Young Soo Kim

5 Samsung executive appointed AST president/ CEO in August 1996. Helped engineer Samsung’s original investment in AST in 1995.

Soon-Taek Kim

6 Samsung executive appointed president/CEO April 28. Was vice president of Samsung Group’s executive council and most recently head of Samsung Heavy Industries.

Source: Times reports, AST Research Inc.; Researched by JANICE L. JONES / Los Angeles Times