Downturn and purchase (1992–1997)
Following strong growth in 1990 and 1991, the company posted its first quarterly loss in Q4 1992, following a fierce competition in the low-end computer market and the then-ongoing recession in the United States leading to relatively high unemployment in California. Its stock price reached a then-all-time low of $4 per share in late September 1992, and the company laid off about 100 of its roughly 670 employees in October 1992, along with imposing a company-wide progressive salary cut for employees with salaries above $50,000—including Lu. ALR struggled through 1993, posting quarterly losses in all four fiscal quarters, before returning to profitability in Q1 1994.
In early July 1993, ALR became the first company to ship a computer system with a Pentium processor when they announced the first shipments of their Evolution V family of high-performance computers. The flagship Evolution V was intended as a workstation and included a Pentium P5 clocked at 60 or 66 MHz, six ISA expansion slots, three VESA Local Bus (VLB) slots, 8 MB of RAM (expandable to 128 MB), and an optional 170 MB hard drive. The Evolution V-Q was intended as a file server and included 13 full-sized drive bays, 1 GB of memory, ten EISA expansion slots, three VLB slots, and a 1.2 GB SCSI hard drive standard.
In March 1994, the company was awarded a patent for a microprocessor upgrade path that piggybacked off an existing processor while disabling it—a technology that ALR claimed was copied by Intel and several other PC manufacturers. ALR's stock rose from $1 per share to $7.125 following the announcement. Its shares fell to $5.125 in July of that year; however, due to customers waiting for Intel's P54C redesign to the Pentium processor to be released that summer. ALR anticipated another Q3 loss.
The company released the Optima SLR, the first sub-$1000 PC with a Pentium, in July 1995. Clocked at 75 MHz, the system was bare-bones and included no monitor, hard drive, or peripherals, but it came configured with 8 MB of RAM and contained four PCI card slots—two used for a graphics card and multi-I/O card—and one ISA card slot. The Optima SLR was ALR's attempt to recapture the low-end computer market the company had lost. However, InfoWorld opined that the move was reasonable for resellers who would boost their profit margins by including cheap peripherals.
In April 1996, ALR released the Revolution Quad6, the first computer system to ship with a Pentium Pro processor. It came in either single-processor or SMP configurations, supporting up to four Pentium Pro processors clocked at either 166 or 200 MHz.
Advanced Logic Research was purchased by Gateway 2000 in June 1997 in a stock swap valuated at $194 million. According to Money, the acquisition afforded Gateway ALR's "high-end client/server and high-performance desktop innovations". The company was to continue operating as a subsidiary of Gateway, with Lu remaining president while simultaneously rising to the vice presidency of Gateway 2000.
