`VOLKSWAGEN' PC SEEN AS SUB-$1,000 SAVIOR FOR BELEAGUERED AST.

Byline: Evan Ramstad Associated Press 

Computer maker AST Research Inc., trying to find a way to start making money again, has come up with a clever way to stand out - sell a PC for under $1,000.

Just last month, Wal-Mart began selling a new AST machine for $997, the lowest-priced new PC in any retail store. Sales have been strong enough to convince the company that it should continue working on budget-priced machines, AST chief executive Ian Diery said Tuesday.

He calls a sub-$1,000 computer the ``Volks-PC,'' hoping it will broaden the market for personal computers the way Volkswagen did for automobiles decades ago.

Diery said AST is able to make a profit on the lower-cost PC because of the components it has chosen and the contract it has worked out with Wal-Mart, the nation's biggest retailer.

It uses the 486 chip for a main processor instead of the newer Pentium microprocessor. But it has 8 megabytes of memory, 14,400 bps modem, 540-megabyte hard drive, CD-ROM drive and multimedia monitor.

``As a percentage of our revenue, we're going to prosper in the other areas. But we'll make money on this, too,'' Diery said. ``It's really starting to prove the point that everybody wants to do computing now, not just the elite few.''

Analysts see the lower-cost PC as one way for AST to distinguish itself as it recovers from its financial troubles.

``They have to maintain a position on the map. They have to stay in front of people,'' said Richard Zwetchkenbaum, analyst at International Data Corp. in Framingham, Mass.

The product's early success has been one of the few bright spots recently for Irvine-based AST. The company was late advancing some of its core business-targeted desktop PCs last year, and its production costs were above industry leaders like Compaq Computer Corp., making AST susceptible to losses when prices were cut.

AST has been racking up the losses lately - $225 million during the last six months of 1995 and $116 million during the first three months of this year.

Diery, who left Apple in a fallout with CEO Michael Spindler in April 1995, joined AST last fall as chief executive, replacing co-founder Safi Qureshey who remains chairman.

Diery's first priority was to sharpen AST's manufacturing and inventory control. The company was going through its parts inventory less than five times per quarter, while the industry average was about six to eight turns per quarter.