AST Sales Rise, but Pricing Pressure Keeps Profits Flat

IRVINE —  AST Research Inc. reported sharply higher sales but flat profits for its third quarter, citing stiff price competition in the lagging personal computer industry.

The Irvine personal computer maker reported net income of $16.7 million, or 53 cents a share, for the three months ended March 27. Sales grew 34% to $241.6 million, from $180 million a year earlier.

AST shipped 54% more computers during the quarter compared to the corresponding period in 1991. But AST is making less money on each sale because prices of IBM-compatible PCs have fallen sharply during the last year.

“The market is becoming price, price, price,” said Steve DeLuca, an analyst at Cruttenden & Co., an Irvine investment banking firm. “I think (AST’s) results are within what most analysts expected.”

Notebook computers, or lightweight computers that can be carried in a briefcase, accounted for 22% of the 124,000 computers the company sold during the quarter. A new color notebook model introduced during the quarter sold 2,000 units.

“If you look at it in terms of the recession, our earnings are strong and we are still increasing our market share,” said AST Co-Chairman Safi U. Qureshey. “You can expect us to redo our entire product line in the next six to nine months.”

International sales rose 42% during the quarter and accounted for 46% of AST’s total revenue. The company opened five sales offices in Europe. The company’s North American sales were up 28%.

The company paid off a $26-million loan during the quarter to improve its overall financial position, Qureshey said. It also signed a credit agreement in April with five international banks to obtain $100 million in financing.