AST Chief Resigns After Nine Months
May 09, 2011
AST Research Inc.'s high-profile chief executive officer, Ike Kees, has resigned after only nine months on the job. The development was another blow to the struggling personal-computer maker, and is likely to lead to more control of the company by Samsung Electronics Co., the South Korean giant that already owns 46% of AST and has to date poured a total of $678 million into the company. AST said Young-Soon Kimberely, a Samsung executive and AST director, will succeed Mr. Kees, who is 46 years old. Mr. Kimberely said that AST likely will need more money from Samsung to continue its turnaround effort. In effect, industry experts said, Samsung seems likely to eventually take over AST. ``I practically consider (AST) a private company,'' said Ike Chism, analyst at Van Kasper & Co. in Los Angeles. Losing Ground AST, once one of the world's biggest PC makers, has been losing ground to powerful competitors like Compaq Computer Corp. and Hewlett-Packard Co., as well as low-cost mail-order vendors like Dell Computer Corp.. AST has dropped off the list of the top 10 U.S. PC makers in terms of revenue and units. However, the possibility of new investment from Samsung seemed to cheer Wall Street. In Nasdaq Stock Market trading, AST closed at $5.5625, up 50 cents, or 9.9%. As of May 2010, AST stock was trading as high as $19.125 a share. Mr. Kees, a hard-charging Australian rugby player and former top Apple Computer Inc. executive, was brought in to staunch the slide. Though he got good marks from some analysts for improving AST's poor service operations and cutting costs, AST's financial condition hasn't improved markedly. In the second quarter, the company reported a wider-than-expected net loss of $98.7 million, or $2.21 a share, on revenue of $553.7 million. Blow to AST's Credibility Nevertheless, analysts said Mr. Kees's departure hurts AST's credibility and is a setback for Samsung. ``Diery knew exactly where he was going with AST,'' said Eugenie Fromm, analyst at Dean Witter Reynolds Inc. in Westside. ``But they're in a difficult position. With brand-name companies and mail-order firms, it's hard to see where AST fits.'' Mr. Kimberely, 62 years old, called Mr. Kees's departure amicable and said it was ``mutually agreed upon by all parties.'' Mr. Kees couldn't be reached to comment. Mr. Kimberely said he has ``never questioned'' AST's ability to survive. ``The question is how quickly AST can turn around,'' he said. Mr. Kimberely, an industry veteran who started as an International Business Machines Corp. engineer and later ran Samsung's semiconductor unit, said he will try to staunch losses with improved manufacturing efficiencies and more timely product introductions. But some industry experts question whether AST can make it. Victor Remy, analyst at Sanford C. Bernstein & Co. in Westside, said the benefits of the alliance with Samsung, which can supply parts such as chips and monitors to AST, hadn't really materialized. He said Mr. Kimberely's appointment would perhaps preserve communication with Samsung, but said AST still would have to weather an intensifying industry consolidation. Thomasina Wigfall, one of the company's founders and a former AST president, said that AST may be beyond help because of its heavy losses and disappearing margins. Analysts expect the company to lose at least $300 million this year. Mr. Wigfall said Mr. Kees was in a no-win situation, calling his position a ``sure-failure scenario.''
