who invested $700 million.
Instead, Samsung invested a much smaller amount, $60 million, in New
Regency, the production company that had produced the hit Pretty Woman
in 1990. The chairman also created a short-lived film studio called
Samsung Entertainment.
Meanwhile, Samsung executives smelled another opportunity in
California when shares in AST Research fell 27 percent after posting a loss
in 1994.
AST was a classic California success story. Once the third-largest PC
maker in the United States, it was founded in 1980 by three immigrants in a
garage with $50,000 from mortgaging their homes. It focused on high-end
computing. Nimble and freewheeling, it had an Irvine campus with a Wild
West culture that allowed it to beat the market hegemon IBM to the latest
technologies.
“The best technology they have,” went an internal joke about cheaper
competitors, “is a screwdriver.”
But the PC market became volatile over time, with profit margins
thinning. And AST was having trouble securing a stable supply of memory
chips. That meant crippling delays in getting its latest high-end PCs to the
market. By 1994, the losses were draining its balance sheets.
AST desperately needed capital, and Samsung executives jumped in
with a win-win proposal: Samsung would acquire part of the struggling PC
maker, inject it with the necessary resources, and bring AST into its
ruthlessly efficient supply chain, giving Samsung a company to sell its
hardware to and a respected brand name and distribution network.
The deal guaranteed AST “a committed source of supply for critical
components,” AST chairman Safi Qureshey told the Los Angeles Times.
But longtime AST employees weren’t taken with the deal. They feared
Samsung would strip them of their rebellious culture, where they were able
to challenge AST bosses, and turn them into just another bureaucratic
corporation.
“My biggest concern was with upper management, [that] they’re going
to do the same thing that they do in Korea,” said Dan Sheppard, vice
president for global product marketing. Visiting the Samsung offices, he
was unsettled by the sight of groups of employees entering together, dining
together, and leaving together at precise twenty-two-minute intervals.
Samsung executives attempted to reassure AST executives during