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Technology Stocks : Deswell Industries (DSWL)
DSWL 3.714+0.4%Nov 21 3:31 PM EST
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To: kolo55 who wrote (212)11/5/1997 1:26:00 PM
From: Ron Bower   of 1418
 
Paul & David,

If it's .45 fully diluted, I would have to revise my thinking.

I hadn't paid much attention to the non-dilute/full dilute. Earnings for 9-96 Q were 2.1M on 10M revs. This converts to .39 full dilute. David has projected .45 to Paul's .53. My projections are more in line with Paul's (but I don't put much stock in mine after ELAMF). I had slightly over $16M revs and 2.9-3.0 earnings with EPS of .53-.55 and I felt these to be a little conservative.

Major points:
In May they:
Installed the new $8.5M plastics stamping machine
Increased circuit board capacity by 17%
Expanded and increased metal stamping capacity

All of this to meet current projected sales demand. These events caused extra expenses in the last Q. All units were to be in full production this Q and revs near $17M, earnings over $3M are possible.

I've quit worrying about the price of shares and, unless I see some indicator of things going wrong, plan to stay with it. IBM and others are expanding into China at a very fast pace. This is opportunity for Deswell and I see continued growth for a long time because their market is expanding closer to them. I also don't see a major decline in their margin as much of this has to do with the high technology of their equipment.

For what it's worth,
Ron
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