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

To: David Seltzer who wrote (216)	11/7/1997 11:10:00 PM
From: Steven Yang	Read Replies (1) \| Respond to of 1418

David, Paul, Ron, and other DSWLF investors: I have started following DSWLF lately, and on the verge of becoming shareholder. However, two things worry me a lot, and I would like to hear your thoughts: 1. The currency issue related with Hong Kong dollar. Unlike what has been suggested in some of the earlier posts, I think that the currency issue of Hong Kong dollar could pose a very serious threat to DSWLF. According to the company's annual report, the sale of its plastic and metal business is in Hong Kong dollar. That is about 60% of DSWLF's sale. Considering that DSWLF only has 51% interest in the electronic business, it means that DSWLF has an effective exposure to Hong Kong dollar in 75% of its sale. If the currency traders have their way (who think that Hong Kong dollar should be devalued by 20-30% relative to US dollar), the consequence to DSWLF will be material. [Some costs are in Hong Kong dollar as well. But, I do not think that it will offset the sale percentage.] 2. Possible competitions from companies like NTAIF If NTAIF does not buy DSWLF, given its cash position, there is a real possibility for NTAIF to set up a plastic parts business of its own. If a company knows how to do business in China, and the company has quite a bit of cash, there does not seem to be any barrier for it to enter the business. [NTAIF qualifies on both.] Steven

To: David Seltzer who wrote (216)	11/8/1997 2:33:00 PM
From: Ron Bower	Read Replies (1) \| Respond to of 1418

David, You really surprise me! I cannot imagine you selling DSWLF before the earnings report unless you were taking profits with plans to buy back. I was way off on my first read of the NTAIF report. Not a poor report at all - unless one thinks a 38% growth in earnings is weak. Lower revs, but consistent with the projected backlog. In addition, they sold the HK land before the current situation - a very smart move. They've also sold more Deswell - at prices well above current. They have shown good earnings growth and, as everyone knows they are doing, raising cash - for what??? Obviously they wouldn't be planning to buy Deswell - my gut feeling must have been influenced by bad Mexican - because they would not be selling just to buy back. I don't believe them competing with Deswell is in their plans. If anything I believe the expansion they have in mind might be beneficial to Deswell. If they make an acquisition per your previous post - Japan or other SE Asia where $US is very strong - Deswell could be getting a lot of new orders. So - while you are selling, I'm holding DSWLF, selling some other holdings, and watching NTAIF looking to buy some stock and warrants. OR - I'm fooling myself and getting in position for a major loss. Please talk me out of it! Ron