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Technology Stocks : Deswell Industries (DSWL)
DSWL 3.795-0.9%12:39 PM EST
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To: Michael Burry who wrote (280)11/26/1997 3:49:00 PM
From: Ron Bower   of 1418
 
Mike,

When looking at the other companies in similar business, I considered your point about a large well capitalized company buying the equipment and competing against them. This is always a concern of any small company.

While I can see larger companies buying the machines to do in-house manufacturing, I do not see them as competitors. Depreciated value of the Deswell is $35-40M, but actual value is much higher. The machines are highly depreciated. Considering other costs and expenses, the outlay for a larger company to duplicate Deswell's operation could be $100M. This would be a lot of money to risk against an established and efficient operation. I only see companies buying the equipment to do in-house manufacturing.

However, NTAIF may be entering the market against them. It would explain their sale of Deswell stock and raising of capital and Deswell's entry into assembly.

For what it's worth,
Ron
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