AST Research is set to lay off European staff in two weeks? time after slashing 1,120 jobs in North America and Asia, as part of a tough bid to make the company profitable.
AST chief executive and chairman ST Kim admitted the jobs represent 37 per cent of its work force and more cuts in Europe will follow before Christmas. AST parent Samsung Electronics slashed a quarter of AST?s work force - approximately 1,000 people - in April but the cost cuts were insufficient for the company?s recovery, according to Kim.
AST will also adopt the build-to-order model that large PC manufacturers including Compaq, Dell, IBM and Apple Computer have introduced in recent months, but Kim admitted AST cannot win the war to sell higher volumes of hardware.
?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.?
Some analysts said Samsung is 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, other analysts insisted, 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. AST also said its supply functions will move from California to Texas. 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.
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