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Advanced Logic Research has so far managed to confound the computer industry's conventional wisdom that midsized personal computer makers like it will wither away. But ALR is still struggling to regain the rapid growth of its glory days.
While earnings and revenue have improved, ALR's sales are still down from their early 1993 peak, and the company is barely eking out a profit. And in a sign that few on Wall Street expect strongly better results to come, the company's stock is valued at just two-thirds its book value, despite a strong balance sheet. (By contrast, AST Research, Compaq Computer Corp. and Dell Computer Corp. all trade at two and a half times book.)
ALR, unlike big Irvine neighbors AST and Toshiba America Information Systems Inc., has focused on the low-margin end of the computer business. AST has pursued market share to establish itself as a broad-based industry leader; Toshiba America has specialized in the portable computer niche. ALR, meanwhile, has continued fighting for the core desktop computer market, the most hotly contested part of the PC business.
ALR's strategy has been to use its design wits--CEO and founder Gene Lu is an engineer by training--to get and stay ahead of the competition in the Pentiumchip arena, and then parlay its Pentium gains into a complementary line of secondary products, some of which will soon hit the market.
The Pentium part of the strategy has worked well, at least until now. The company was first...