AST finally announced on Sunday that it is withdrawing from the European desktop and server market, slashing 50 per cent of its workforce to concentrate on notebooks.
The struggling PC vendor - acquired by Samsung of Korea last September - said radical restructuring will halve its European payroll over the next two months.
Officials said that the cuts would not fall on any one area of the organisation. But some certain losses will come when AST relocates its Irish manufacturing plant in Limerick - which currently employs 430 people - to a smaller plant in the same region employing only 135 people.
Rod Rodericks, senior vice president of AST, said: ?AST has made it clear that it needs to take drastic action to drive its return to profit. As part of that strategy it has been necessary for AST Europe to focus on its most profitable area of business.
Officials pinned most of the blame on the recent economic turmoil in the Far East, but AST has seen a steady fall in its PC market share since 1996. Its share in the fourth quarter of 1997 was just over 2.5 per cent worldwide, compared to market leader Compaq with 43 per cent, according to Dataquest.
Swingeing cuts in the European workforce, as predicted by 'VNU Newswire', come hot on the heels of Samsung?s restructuring efforts in north America. Last April, the Korean electronics giant axed 1,200 jobs - a quarter of its US workforce.
AST Europe?s shift in emphasis away from desktops came as no surprise to analysts. ?This is to be expected,? said Hannah Kirkman, an analyst at Yankee Group. ?AST has been losing money in Europe and Samsung has been a very indulgent parent. AST simply doesn?t have the necessary brand image for servers and desktops in Europe.?
Kirkman believes AST will be more successful in the corporate notebook sector, which is dominated by Toshiba and Compaq. However, she warns that, with the majority of notebooks manufactured in Asia, ?a lot will depend on what happens in the Far East economies".
Another analyst noted that AST is a more firmly established brand in the notebook sector than in desktops, and profit margins are higher there.
A spokesman for Northamber, AST?s main distributor in the UK, claimed it will not be adversely affected by AST?s market shift. ?They?ve discussed it with us all the way and we don?t have any special restructuring or job losses planned,? he said.
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