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Troubled AST finds new owner

Samsung ready to wash hands of loss-making PC subsidiary

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Samsung has finally managed to rid itself of its long-term albatross, AST. The financially barren AST computer unit has been bailed out by ex-Packard Bell high flyer, Beny Alagem. The former Packard Bell chairman and chief executive yesterday agreed to acquire the ailing subsidiary for an undisclosed sum. Samsung will hang on to 25 per cent of the company. Alagem gets the AST brand name and its technology patents. The deal is thought to be worth about $200 million. The fate of AST’s other assets, such as employees and factory equipment, has yet to be decided. AST will reopen under the name of AST Computers, moving from its present base in Irvine, California to Los Angeles. It will abandon one of its traditional markets - the corporate user - and instead will concentrate on the home and small to medium business market. Beverly Hills-based entrepreneur Alagem will be chairman, president and CEO. The sale sees Samsung cutting its losses - it is believed to be accepting around half the price of its $377.5 million investment in AST, which began four years ago. It follows years of considerable financial losses and recent job cuts at the unit. Samsung will retain an initial 25 per cent minority stake in AST, which will remain private. The PC unit was a thorn in Samsung’s side ever since it acquired 40 per cent of what was then AST Research. Analysts say the Korean electronics giant is unlikely to recoup all of its investment through the deal. Paulo Puppoli, a market analyst at Dataquest, saw the sale as good news for both Samsung and AST. He said the PC unit had been a cash drain on Samsung, which it was desperate to offload. AST itself could also benefit from consumer rather than corporate branding, he said. But the buyout alone is not enough to restore the faith of some former AST business partners though. Jackie Raybould, Elcom operations director, said Elcom withdrew from distributing AST computers about 18 months ago and was in no hurry to reacquaint itself with the brand. "We’re not interested in it. AST as a brand has dropped below the market noise level," she said. Raybould added that the manufacturer would have a hard task to break back into a market which is facing tougher competition than at any other time. ®

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