AST Research. Samsung has plans. I wonder who's DVD-ROM they will use?????????????????????????????
scmp.com
TuesdayÿÿSeptember 9ÿÿ1997
Samsung plans $15.4b investment to drive AST into big league
ERIC LAI
Samsung Corp will invest US$2 billion (HK$15.4 billion) to transform its flagging PC subsidiary, AST Research, into one of the world's top five personal-computer makers by 2005.
AST, which was bought out by the South Korean diversified giant in August, will take over all of Samsung's computer sales outside of Korea and Japan. It also will implement a form of build-to-order system to cut manufacturing costs and increase profit margins.
"We are a totally different company in terms of management, financial stability and product availability," AST's Asia president Hoon Choo said.
"It is good that they have a turnaround plan," said Cherry Velarde, Dataquest Asia's PC analyst. "I think they have good potential with Samsung backing them."
Founded in 1979 by three engineers - two Chinese and one Indian - southern California-based AST ranked as one of the top 10 PC-makers in the world three years ago.
However, the firm was less adroit than many of its rivals in the fast-changing PC business and has reported 12 consecutive quarters of financial losses, including the quarter to March 29 this year.
As a wholly owned subsidiary of Samsung, AST Research no longer will report quarterly financial results.
Samsung was the top PC-seller in Asia last year, excluding Japan, according to technology consultancy IDC. Mr Choo said 98 per cent of sales were in Korea, where PC sales have fallen due to the troubled economy.
AST's turnaround has been hampered by management instability, with four changes of chief executive in less than two years.
Kim Young-soo, the first Samsung executive to run AST, resigned in May after eight months on the job after the company lost $110 million in the first quarter of this year, resulting in 1,000 laid-off employees, or about 25 per cent of its workforce.
He was replaced by Kim Soon-taek, another Samsung executive who headed the monitor and semiconductor manufacturing divisions.
With $87 billion in revenues last year, the Samsung Group dominates many areas of the information technology industry, including the manufacture of LCD monitors and Ram chips, of which it produces almost 17 per cent of the world's total.
Outside Korea and Japan, Samsung sold only a few notebook PCs, while AST boasts a complete line of personal computers aimed at the corporate market, including its Ascentia notebooks, Bravo and Advantage desktop PCs and a fairly new line of Manhattan servers.
To increase sales, AST plans to target smaller companies. In Asia, the firm saw a niche in selling to companies of fewer than 50 employees, Mr Choo said. Sales to companies comprise 80-85 per cent of AST's sales in Asia, and continue to grow faster than consumer sales.
In the mainland, AST fell from second place in 1995 to fifth place for 1996, according to IDC. AST's head of North Asia, Andrew Au-Yeung, said the company did not ship as many PCs to distributors and resellers on credit as other PC makers, which hurt its market share.
AST's revenue in the mainland increased 42 per cent in the first half of this year compared with the same period last year, Mr Choo said. While the Asian region overall was not profitable, China and Hong Kong were both close to breaking even, he said. |
