US$115.8 million Q1 loss prompts AST layoffs, shutdowns

AST Research will lay off about 300 workers and close some offices in response to a first-quarter loss of US$115.8 million, the PC company has announced.

Revenues for the quarter, which ended March 30, were US$530 million, compared to US$670.2 million, for the same period a year ago, in which AST reported a loss of US$6.5 million.

Meanwhile, sales were down 22% worldwide to US$520 million. During the quarter, AST shipped about 300,000 units including 70,000 desktops and 30,000 notebooks, with 93% of them based on the Pentium or Pentium Pro microprocessor.

"Lower sales were caused by excess competitor inventory in the channel, reduced industry demand for PCs during the first two months of the quarter and greater pricing pressures than initially anticipated," says Ian Diery, AST president and CEO. "Although the company's product development cycle has improved, product development issues also contributed to the lower-than-expected results."

As a result, AST will restructure its worldwide operations, including organising the Americas, Europe and Asia-Pacific regional operating groups into separate entities, consolidating some operations, closing certain regional offices and creating a smaller, centralised corporate operation at the company's Irvine, California, headquarters.

This will lead to a restructuring charge during the second quarter of about US$10 million to US$15 million. Previously, the company announced layoffs of about 700 workers.

AST can be reached on the World Wide Web at http://www.ast.com.

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