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Co-Founder Relinquishes Chief Executive Post at AST : Computers: Successor says the firm must act to speed up product development.


IRVINE — In a dramatic effort to pull itself out of virtual free fall, AST Research Inc. on Thursday announced that its beleaguered co-founder and chairman, Safi Qureshey, will step down as chief executive 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 AST 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 of AST, focusing on long-term strategy. But day-to-day operations will be in the hands of Diery, 46, who headed Apple's personal computer division before being forced out in a power struggle earlier this year.

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

The hiring of Diery means that for the first time Irvine-based AST will not be led by any of the three immigrants who founded the company in July, 1980.

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.

"As a co-founder, you want to see your organization grow," Qureshey said in an interview Thursday. "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."


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 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 extensive layoffs last year, loss of market share, and the recent departure of five top executives.

"This situation can be turned around," Diery said. "If I didn't believe that I wouldn't be here."

He said that 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 delays that cost dearly in an industry with very short product life span.

AST's dismal first-quarter performance came on a steep drop in U.S. sales. Revenues fell 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%.

Analysts supported what they called an overdue management change but said the drop in sales means the company has far more to worry about than 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."

The changes in AST's relationship with Samsung suggest the Korean company will be playing a much larger role.

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