Thread,
Can't keep quiet. Been running around the various threads. Some comments on what I've been seeing. I'll probably get long again.
Insider selling was brought up. The Insiders have exercised stock options. According to Mr. Lau, they cannot afford to pay the $10 or so to the company without selling some of the stock, so they sell the amount necessary in order to pay the company for the optioned stock. They exercise to prevent a buildup of option dilution and to increase the amount of dividends received. It appeared that the last Insider sales were bought by Funds as it all happened on one day with no price fluctuation. Funds have been buying as high as 22.00. As near as I can determine, the Insiders have taken no profits from the company with the exception of salaries and dividends. They own 50+% of the outstanding shares. In the past year they have seen a $48M paper profit followed by a $36M paper loss.
The Insiders are the working management. While they follow the market price of the stock, there has been no indication that they do anything to influence the price. As Mr. Lau said, "we will do the best we can and the market will have to figure out what it's worth".
The reports are prepared by Deloitte Touche Tohmatsu of Hong Kong according to US GAAP.
Devaluation of the yuan would be beneficial to Deswell if other currencies did not fall further as a result.
Don't anyone be fooled. They have been hurt by the Asia Crisis. Almost every company in Asia has been hurt and it is just now starting to impact companies in the US. How long this will last is yet to be determined. Mr. Lau indicated that they will "continue to profit and pay dividends, but one should not expect growth to continue as in the past". IMO - The instability has caused customers to reduce the size of orders and they might even lose a customer or two. Jetcrown and Kwanta should continue to grow, but at a lower rate. Kwanasia's primary customers of Behringer and InterTel should be OK, but the circuit board business faces a lot of competition. Hopefully they will not lose Mita back to Japan and that the new VTech business to Jetcrown plus Kwanta's growth will be enough to offset any lost sales.
I have been trying to avoid any comments on price as it automatically turns into hype. I agree with Mr. Lau, the market will do what it will do. As I don't understand the market, IMO on it isn't worth much.
Deswell may be one of the most ignored companies on the market. Many research sites don't cover it, you can no longer pull up the SEC filings, Zack's has removed the one analyst's recommendation, Yahoo doesn't post the earnings and the profile is outdated. Most sites that do show it have the wrong information. Marketguide is normally reliable but it's so far off it's unbelievable. It is very hard to find any info on Deswell. Some tech analysis sell recommendations kicked in around 16.00 and this might be responsible for the drop to 14.00. Most people don't screen for stocks below $100M market cap. Others shy away from the low float. Deswell is not a trading stock, it's an investor stock selling at a very low price. At zero growth, BV + earnings + dividend will exceed today's price in under 2 years. ($8.25 + (2x$2.37) + (2x$1.00)+ $14.99). Talk about cheap! This company has been compounding growth at 48% a year. (couldn't resist some hype as I bought more yesterday -g-)
FWIW,
Ron
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