AST looks for profit in pre-Christmas cull

AST will be forced to lay off European staff after slashing 1,120 jobs in North America and Asia as part of a tough bid to make the company more profitable.

ST Kim, AST CEO and chairman, admitted the job cuts represented 37 per cent of its workforce. The redundancies come despite a previous move by AST parent company Samsung Electronics, when it slashed a quarter of AST's workforce - approximately 1,000 people - in April. Kim claimed the cuts were insufficient for the company's recovery.

AST will adopt the build-to-order model that large PC manufacturers, including Compaq, Dell, IBM and Apple, have introduced in recent months.

'AST has taken previous steps to restructure, which have been beneficial but have not gone far enough,' he said. 'Looking squarely at our recent performance in the context of the competitive landscape for PCs, our long-term goal can no longer be simply to sell more PCs to more customers.'

Analysts said Samsung was unwilling to invest in AST, partly due to the economic problems in South East Asia, and would prefer to cut costs. This would ensure the acquisition of AST it made in April does not prove too costly and cut too much of Samsung's profit. AST is the main PC business for Samsung outside Asia, so the parent company is fully committed to AST in the long term.

AST announced Samsung will take over its sales facilities in Australia and Southeast Asia, and the companies will begin cooperative manufacturing in China. The company lost $110 million in the first three months of 1997 and its share of the PC market has fallen from four per cent to less than 2.5 per cent, according to research companies.

The UK is still without a managing director, since the departure of Graham Hopper two months ago (PC Dealer, 29 October).