AST Research to Announce 1st Acquisition
AST Research Inc., which became the nation’s largest manufacturer of “turbo-charging” computer extras on the strength of its products for the IBM personal computer, is expected today to announce the acquisition of a small maker of products for the more powerful and sophisticated computers of Digital Equipment Corp.
The acquisition, the first for 5-year-old AST, marks another step in the Irvine-based company’s strategy to reduce its dependence on IBM’s personal computers, diversify its products and generate more sales. AST’s “add on” products, the majority of which are sold in retail stores, improve or customize a manufacturer’s standard-issue product and are the equivalent of such essential extras as a radio, clock and air conditioning in new cars.
“The industry and the public fear that AST is too dependent on IBM,” said Tom Yuen, an AST founder and vice president for strategic planning. “I’m not fearful about that. But if we want to continue growing at our momentum, we can’t do it by sticking solely with IBM. We’ve got to look to new markets.”
Under the proposed acquisition, AST would acquire, for an undisclosed amount of cash and stock, Camintonn Corp., a Santa Ana-based company that makes about eight products for DEC computer systems, including its new and popular MicroVAX II. Camintonn, founded in 1981, has revenues approaching $6 million annually.
AST Sales at $140 Million
AST rose to prominence, and nearly $140 million in sales last year, as the top supplier of add-on products for the world’s most popular personal computers--the IBM PC and its siblings, the AT and XT. Analysts estimate that there are about 10 million IBM and IBM-compatible desk-top computers in operation today, with another 2 million machines expected to be sold this year.
Although the market for DEC products is far smaller because it is focused on business with higher computing demands, DEC computers--and particularly the MicroVAX II--have fared well. According to analysts, 10,000 MicroVAX II machines were sold in its first eight months on the market. In addition, 30,000 units of an earlier version of the machine have been sold.
Analysts said AST has apparently singled out another potential winner in the MicroVAX II. “They’ve picked a good machine to go after,” said Elizabeth Levy, an analyst with Dataquest in San Jose. “There’s a lot of potential for growth.”
However, the DEC marketplace has not been kind to everyone. Last year, DEC twice sued Emulex Corp. in Costa Mesa, the largest add-on manufacturer for DEC computers, for alleged patent infringement and unfair business practices. AST’s Yuen shrugged off the importance of the lawsuits to his company. He said that while DEC is known to be “protective” about its products, technology and sales ground, he claimed that the devices AST will be selling will not infringe on DEC’s turf. “We checked it out,” Yuen said. “Camintonn deliberately steered away from any proprietary products of DECs.”
Products and Staff
Despite its small size, Camintonn offers AST an immediate product line and staff of 14 for additional product development, Yuen said. He said AST will be assigning five of its most “entrepreneurial” employees to work with the Camintonn staff in what will be known within the company as Independent Business Unit 2.
The drive into the DEC market differs significantly from AST’s moves 18 months ago when it established Independent Business Unit 1 to generate products for the Apple Computer marketplace.
At that time, AST started from scratch with about 10 hand-picked employees, an empty office building and orders to create products that would work with Apple’s popular personal computer, the Apple II, as well as its recently introduced Macintosh model. Within the first year, the group had developed two products for the Apple II.
But the bigger payoff came last month, when Apple unveiled the Macintosh Plus, a model specifically designed to accept add-on equipment. Yuen said the sophisticated data-storage device that AST developed to work with the Macintosh Plus has proven popular in its first month of sales. However, he declined to give sales figures on the $7,000 device.
