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37% of AST's Workers to Be Laid Off

December 03, 1997|DAVID HALDANE | TIMES STAFF WRITER

IRVINE — AST Research Inc., an Irvine-based computer maker, will lay off 37% of its worldwide work force of about 3,000 people in a restructuring to be announced this morning, an AST spokeswoman said.

"While it is very painful, it is necessary," spokeswoman Camerone Welch-Thorson of Irvine said. "It will help us to become quick and nimble, and maintain a competitive edge in a very dynamic and rapidly changing PC market."

The announcement was to be made at 6 a.m. PST, Welch-Thorson said. She would not release details, saying the company wanted to break the news itself.

"We have an obligation to our employees," she said. "The company process is that we want them to hear it from us as opposed to seeing it in print."

As of August, AST had about 600 employees in Irvine and approximately 3,000 worldwide.

Welch-Thorson said the restructuring will include organizational changes, markets the company plans to focus on and "areas we'll expand."

AST's problems began in 1994 when it was late in releasing several new computers and then became mired in cost-cutting, restructuring and a scramble to design competitive products.

When AST was doing well, it concentrated on personal computers. In the last six months, it has switched to computers for small to mid-size businesses.

In April, the company reported one of the most disappointing quarters in its corporate history and laid off about 1,000 employees, or a quarter of its work force, in a desperate attempt to cut costs.

AST's sales plummeted to $347 million in the first quarter, down 35% from $530 million in the comparable period a year earlier. The company also reported a quarterly loss of $110 million, or $1.90 per share, following a loss of $116 million, or $2.59 per share, a year earlier.

The dismal reports, which marked the company's 12th consecutive quarterly loss, came less than a week after the company announced it had agreed to be acquired by Samsung Electronics Co., a South Korean company that already owned about 49% of AST.

In August, Samsung Electronics completed its purchase for $477 million in cash and assumed debt.

South Korea-based Samsung Electronics is the world's largest memory chip manufacturer.

During the 1980s, AST was one of the fastest-growing high-tech companies in the world.

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

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 was admired as an entrepreneur, he admitted that management was not his strength.

Qureshey stepped down as chief executive in November 1995, handing control to Ian Diery. In August 1996, Samsung replaced him with Y.S. Kim, who criticized Diery for not using all the resources that Samsung offered to help reverse AST's slide. Kim was replaced in April by Soon-Taek Kim.

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