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Technology Stocks : Deswell Industries (DSWL)
DSWL 3.310-2.6%9:34 AM EST
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To: j rector who wrote (1010)10/10/1998 1:50:00 PM
From: Ron Bower  Read Replies (1) of 1418
 
J, (and jrorig on Yahoo)

I've decided my position on a stock buyback was influenced by the amount of losses I've had over the last few days and not by good judgement. After further thought, I now consider it to be the wrong thing for them to do.

I have considered how much benefit we would get from them spending $2M on a buyback that would likely buy them 200K shares. It would decrease the dilution and make BV/share worth about 3.5% more. The stock price would go up 20-30%, perhaps more, but the value of the company would not substantially increase.

If they hold and use that same $2M, the long term return would likely be much higher than the temporary increase in the stock price. I would rather they keep the cash and use it than buy back the stock.

I want company growth, not artificial stock price growth. A buyback might limit their use of funds and that's the last thing I want to do at this time when cash is so powerful in Asia.

FWIW,
Ron

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