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Technology Stocks : Deswell Industries (DSWL)

DSWL 3.690

-0.4%

Nov 26 3:50 PM EST

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To: j rector who wrote (705)	5/4/1998 10:18:00 AM
From: Ron Bower	Read Replies (1) of 1418

Long talk with John Nesbett Friday. Conclusions per conversation: We have greatly understated the growth and amount of sales to Behringer from Kwanasia and ignored the growth and amount of circuit board business they do with customers on a contract basis. Watch Behringer and InterTel for Kwanasia growth, but Kwanasia growing other business as well. New Mita business will add to Kwanasia. IMO the new facilities that will come on line in Sept are due to Mita. This is a major step forward. VTech is big. VTech has 5 suppliers of plastics and Jetcrown has acquired 1/3 of the business in a very short time. VTech very impressed by Jetcrown's engineering department and their quality control. A lot of growth potential with them as they are growing fast. We are understating jetcrown and overstating Kwanasia. Jetcrown is still the 'core' business. We look at the dollar volume of Kwanasia and forget that Jetcrown's sales to Kwanasia are eliminated in the conslidated report. "Kwanta attained profitability this last quarter" This means that Deswell's past profits and margins have offset losses from Kwanta! No acquisition thoughts in mind, but they are open to it if it fits into the current operation. Current plans are for expansion. Any announcements indicating expansion is an indicator of additional business. Not single contracts, but continued long term volume. Company currently operating at 80%+ and try to stay in that range. Mr. Nesbett gets my thanks for the information he gave me. It straightened out a lot of misconceptions I and others had made. I haven't posted everything, but have a much better idea of what's going on with the company. For what it's worth, Ron

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