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Technology Stocks : Deswell Industries (DSWL)
DSWL 3.400-0.3%Nov 6 3:58 PM EST
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To: Ron Bower who wrote (1104)11/6/1998 12:10:00 PM
From: Ron Bower  Read Replies (1) of 1418
 
Thread,

I noticed major increases in InterTel's price the last few days so I thought I'd take a look. They are projecting a 25% sales increase in their existing products and a major increase in the new IP products. Some of the increase this Q, but a large jump in the next. All of the increased sales means more orders for Deswell. (Price increase because a Forbes article has them at 500% earnings growth, #1 on their list. Forbes has been pretty good at their predictions in the past.)

Last year sales:
InterTel grew 24% and has just now come out with new product
Behringer grew 128% and bought more shares of Deswell
Mita grew 32% and is being bought out by Kyocera
NamTai grew 26% and has acquired control of Albatronics
Vtech was not a customer, but VTech's telecom division grew by 91% last year. They are now coming out with new phone models and will be coming out with the 2400Mhz. Next year they intend to enter the China mainland market.
At the Annual Meeting Deswell management stated they were in discussion with some new customers and were optimistic.

So Mita causes a reduction of sales by 12% for one Q, the growth in the remaining customers should easily offset. When the Mita situation gets straightened out, they should be stronger than ever.

I don't know what's going to happen this Q, but IMO this is going to be a much better year than we've been thinking and next year...

FWIW,
Ron
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