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Technology Stocks : DSP Group: an incredible bargain?
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To: Kevin Hay who wrote (1039)11/23/1999 3:15:00 PM
From: savolainen  Read Replies (1) of 1055
 
[Pile o' Cash]

Hi Kevin,

Thinking about DSPG's pile of cash tugged at some memories of the last cc. Went back and checked, and sure enough, this was explicitly discussed, and indeed it is acquisition related, tho maybe not til next year.

In a nutshell, a question was asked about what they are planning to do with all the cash. The answer was put in the context of how acquisition accounting rules will be changing. Apparently pooling is being phased, out and DSPG feels that this will give the edge to cash:

"We believe that in the year 00 after the pooling will not be available anymore, there will be a big advantage to acquire either companies or technology by cash rather than by shares. Since we have plans to really do some, lets say... to expand our business, We believe that strong cash position is very important and we feel comfortable that we will know how to use this cash very wisely."

We know that DSPG is looking to lean into VoIP (earlier in the call):

"and VoIP is definitely one of the areas in which our company is seeking complimentary technologies in different ways. And this is a matter on our agenda and we believe that at the end we will be doing something much more, lets say, intensive in this area..."

My guess is that the acquisition will be "in this area".

Go get 'em DSPG!
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