AST Sees Sign of Hope in 9th Straight Quarter of Losses

Struggling personal computer maker AST Research Inc. reported a 16% drop in sales and a loss of $98.7 million for the second quarter, marking its ninth consecutive losing quarter.

The latest results indicate that the company’s turnaround efforts are a long way from returning AST to profitability. But executives said they are starting to reap the rewards of aggressive efforts to cut costs and roll out new technologies faster than the competition.

The company’s sales in North and South America dipped 4% in the second quarter compared with a year earlier, but were up 30% from the first quarter. Chief Executive Ian Diery said the company finally might have halted a prolonged market share slide that threatened to drop the company out of the ranks of the nation’s largest PC manufacturers.

Diery said a burst of shipments and sales in the second quarter led to “a domestic market share increase and the reestablishment of AST as a top-10 PC supplier.”

“Our efforts to grow market share and return to profitability are definitely moving in the right direction,” Diery said.

In fact, AST, which had announced layoffs of 300 workers three months ago, said Thursday that it will hire 80 new employees at its Irvine headquarters to bolster the company’s research and development efforts.

The company’s second-quarter loss, which amounted to $2.21 per share, was deeper than in the comparable quarter a year earlier, when AST posted a loss of $31.6 million, or 98 cents per share.

AST’s second-quarter sales of $554 million were down from $662 million a year earlier, but the latest sales numbers mark a slight improvement over first-quarter revenue of $530 million.

AST’s latest results offer a glimmer of hope, analysts said.

“To increase [sales] in what’s traditionally a difficult quarter, I think that’s good news,” said Scott Miller, an analyst at Dataquest Inc. in San Jose.

Through the first six months this year, AST reported a loss of $215 million, or $4.80 per share, on sales of $1.08 billion. In the comparable period last year, it lost $38.2 million, or $1.18 per share, on sales of $1.33 billion.

Through the 1980s, AST was one of the fastest-growing PC companies in the industry, but product delays, the troubled acquisition of manufacturing facilities from Tandy Corp. three years ago and other problems sent AST into a tailspin.

The company has lost $547 million over the past nine quarters, and co-founder Safi Qureshey was forced to give up his positions as chairman and chief executive.

To survive, AST received a $378-million cash infusion last year from Korean giant Samsung Electronics Co., a company that has since provided more financial help and taken a 46% stake in AST.

In November, the company hired Diery, a former Apple Computer executive. He has pushed AST to beat its rivals to market with the latest processors and features and to compete fiercely on price. Meanwhile, Samsung has helped AST streamline its manufacturing operations in Texas.

AST’s stock fell 50 cents a share Thursday, closing at $4.875 in trading on the Nasdaq market.