acquisition talks.
“We know we have to stand back and let you guys do what you do best,”
an executive on Samsung’s side of the table said, according to Sheppard.
In April 1995, the first stage of the deal went through; Samsung bought
just under half the company for $377 million. But chief executive Kim
Soon-taek (S.T.) told the Los Angeles Times that Samsung, with its 49
percent stake, quickly felt hamstrung from pursuing its own long-term
vision, since it had to deal with other shareholders. It was an early sign of a
culture clash.
“Public companies are dictated by short-term results, which is not the
reason Samsung acquired AST,” he later said. Samsung, he said, was in for
the long haul to build a major PC manufacturer.
In 1996 the DRAM market, the bread and butter of Samsung’s profits,
collapsed, draining balance sheets. Still, Samsung followed with a full
acquisition of AST for another $469 million the following year.
As Samsung tried a slew of strategies to take AST out of the red, it
asserted a stronger and stronger grip on the company.
“That’s when our worst fears came true,” Sheppard said.
More Samsung employees began trickling into the California office,
sitting in on team meetings and taking notes, and filing reports with
Samsung headquarters. Samsung called these people dispatchers. Their role
was to bridge the AST management culture more closely to the South
Korean mother ship, smoothing the cultural and language barriers.
“Why don’t you do it like this?” they started asking about various PC or
notebook computer designs. “We like this idea. We don’t like that idea.”
To the chagrin of AST employees, Samsung engineers insisted on
bulkier designs teeming with more features, even though Samsung had
publicly insisted on cost-cutting measures.
“You need to put this LCD on the front of the mini tower,” an AST
manager, taking orders from Samsung, told his team. “It’ll show the music
playing on the CD track.”
“A mini tower goes under the desk,” an employee told his boss,
according to Sheppard, who was present in the meeting. “It’s not on your
desktop, so people won’t see it. That’s taking a five-dollar hit, which means
on the street that’s going to be about twenty dollars, for a feature nobody
wants. We’re not going to do it.”