Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Richard Barron who wrote (276)	11/25/1997 2:42:00 PM
From: Ron Bower	Read Replies (1) \| Respond to of 1418

Richard, My attempts to track a multitude of stocks like you do have resulted in nothing but confusion. I can't do it and find your ability amazing. I have found that it is much better for me to devote efforts to a few companies. While I might hold four or five, I almost always have a concentration of monies into one or two holdings. My current situation with Deswell is unusual even for me, but I have many reasons for investing in Deswell beyond those we've mentioned on this list. Comments on your post: They have recently (6 mos.) spent $10M to add one plastics extrusion machine and three circuit board stamping machine to the existing units. All machines are the most modern, state-of-art, high volume units providing lowest unit cost at highest quality. Raw material cost - You make the assumption that Deswell will be paying more for raw materials from a devalued currency and thereby less able to compete without lower margins. It seems to me that: basic raw material cost would be the same to everyone (including US companies) even if they are paying in a devalued currency. Deswell's advantage is lower production costs. there is little chance that the $HK will have a major decline and would have little effect if it does, the $PRC Yuan does not fluctuate. The only currency devaluation I see hurting Deswell is the $US. I believe Deswell and most all companies dealing internationally base sales to the $US. Someone correct me if I'm wrong. At one time I thought Deswell to be a takeover target. I now believe their position makes them a buyer. Deswell has $27M US in liquid assets plus $4.5M warrant monies available ($24M US cash). Companies in Japan, South Korea, and other Asian countries have been making investment in China. These companies may be in trouble and forced to liquidate China investments because the assets in their own country have no saleable value. A couple of buyers come to mind - Deswell and Namtai (i'm looking at it). $19M US is a lot of Yen! The competition for these assets will come from Taiwan and Singapore. US companies will be interested but the recent market situation will make them tentative and too slow to act. Taiwan has too many restrictions on dealings with the mainland. Most HK & Singapore companies have been hurt by the recent market drops. The potential buyers are limited. NTAIF is in a perfect position to capitalize on the situation, Deswell has less resources but would make acquisitions that better fit their operation. IMO - Namtai might develop grand aspirations that could overextend their resources. I must learn some brevity - sorry, Ron