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Technology Stocks : Deswell Industries (DSWL) -- Ignore unavailable to you. Want to Upgrade?

To: Ron Bower who wrote (1368)	3/1/2000 11:28:00 PM
From: Ron Bower	Read Replies (1) \| Respond to of 1418

Looking forward - Kwanta has new management team in place, is revamping the entire operation, expanding, and should soon be making contributions to revs and earnings. For now, it's losing and taking cash. In other words, they know where they will be selling, just have to get in position to do it. Kwanasia decided long ago that they had to do something drastic if they were to grow. They also wanted to control their own destiny instead of being at the mercy of a customer. (IMO they got burnt and aren't going to let it happen again.) While they continued attempts to regain lost business, months ago they hired some sharp, young tech people, sent them to schools and other training, and have brought them back to design some new 'security and telecom' products. One of the products was just demonstrated at a Telecom Equipment show in Germany and was well received. The products are not for mass marketing, but are high dollar tech units with high margin returns. I don't know the target market, but it appears to be telecom companies and major companies with certain telecom needs.(IMO It will be Kwanasia's product, but companies like InterTel or Lucent may want to market it with their own products.) Jetcrown is in talks with potential customers, many of them with names we would all know. They are currently operating at capacity, limited by space. They are working hard to solve their expansion needs and should have them resolved soon. (I see that Namtai has had to build their own - Deswell may have to start owning property instead of leasing.) Dividends will not be lowered but they do not feel thenselves as a dividend company. If they have cash needs for growth that makes them uncomforable paying the dividends, they will lower. This is a transition period for all three companies. IMO Jetcrown must resolve their facility problems. It might require some debt and loss of dividend payouts, but it might be best if Jetcrown owned their own facilities, designed with expansion capabilities. Kwanta has the contracts when they get into full operation. This isn't 'venture' expenditures, but known. Kwanasia is taking a gamble that, if it fails, will cost a couple of million dollars. Deswell's management has approved the expenditures because they believe the market is there for the product and the gamble worth the risk. Deswell was in an excellent position to weather the 'crisis' because they operated conservatively. IMO they now see opportiunities and are prepared to be more aggressive. They should begin to show results of the changes in the next few months. Weakness short term, very strong long term. FWIW, Ron