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Technology Stocks : Deswell Industries (DSWL)
DSWL 3.410+3.6%3:58 PM EST
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To: jmt who wrote (1216)2/16/1999 8:36:00 AM
From: Terrapin  Read Replies (1) of 1418
 
Hi jmt,

As I said in my post, I am making no claim that they have an acquisition strategy or that they will cut their dividend. However, the recent talk on the thread concerning expansion during this crisis and questions about the dividend (probably just the special dividend) have piqued my interest. They have purchased new machinery, which I believe to be a good investment, and they may just leave it at that.

Their dividend + special dividend has been generous. My guess is that they pay it out because they believe it to be the best use for cash not needed in operations. If they are operating some units at full capacity while there are other businesses in distress that could be acquired then I would not interpret a dividend cut to be a negative signal. Again, I am not saying this will happen.

I also hope management is protective of their cash during this crisis. If they have had a couple bad quarters and do not yet see the end of the tunnel then I will be happy not to receive the special dividend. In my post I should have specified the special dividend as the one that will likely be cut.

The fact that they did not report a loss has not escaped me and is a main reason I am still holding. But I see this as a big test for management to seize opportunities. So far they have purchased new machinery and maintained profitability - very good and conservative. Another option is to apply the cash normally paid out in dividends to a more aggressive strategy of growth through acquisition. The time may be right.

Just my thoughts, FWIW,
John
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