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Struggling Computer Maker Lays Off 700 Workers

October 14, 1994

IRVINE, Calif. (AP) _ Computer maker AST Research Inc. on Friday began laying off nearly 700 workers, or 10 percent of its staff, in a cost-cutting move that will send its California manufacturing operations to Taiwan.

AST said it expects to lose $39 million to $40 million, or $1.20 to $1.25 per share, in fiscal 1995′s first quarter, which ended Sept. 30. Losses could continue into the second quarter.

AST blamed the losses on deep price cuts that were needed to stay competitive, as well as product delays and difficulties in acquiring needed components.

″We must take aggressive actions and redefine our business model to remain competitive in the market,″ said Jim Schraith, AST president and chief operating officer.

Schraith said AST will release plans to become more competitive in coming weeks. They focus on four core areas - customers, products, distribution channels and certain fast-growing geographic regions.

AST stock fell sharply after the announcement, dropping $1.50 a share to $10.75 in heaving afternoon trading on the Nasdaq market.

The company said it plans to reduce its worldwide workforce of 6,900 by 10 percent. About 100 workers at AST’s Fountain Valley, Calif., plant lost their jobs immediately. Ultimately, about 440 Fountain Valley workers will be let go, with additional layoffs coming in other areas, the company said.

The Fountain Valley plant will close Feb. 1, 1995, and its operations will be moved to Taiwan, where AST already has a subsidiary.

AST said it expects fiscal first-quarter revenue of $495 million. The quarterly report will be released on Oct. 27.

The company also said it has received a waiver on its $300 million committed bank revolving credit agreement, which covers potential defaults.

AST shipped 1.43 million personal computers worldwide during fiscal year 1994, including 1.16 million desktops and 268,000 notebooks.

The company has manufacturing plants in Fort Worth, Texas; Limerick, Ireland; Tianjin and Dongguan, China; Taiwan and Hong Kong.

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