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

To: kolo55 who wrote (291)	12/2/1997 10:57:00 AM
From: Ron Bower	Respond to of 1418

Paul, Thanks for your post about margins. I'm not using, but I had noticed that my margin account for buys had dropped to a very low percentage of total. e.schwab must be one of the brokers that use a $5.00 level because the margin limit is about right percentage to my non-DSWWF. Something to bear in mind should I plan to use it. DSWWF isn't supposed to be under $5.00!!! Not far behind you on amount held if warrants converted. Ron

To: kolo55 who wrote (291)	12/3/1997 10:08:00 AM
From: Ron Bower	Read Replies (1) \| Respond to of 1418

Conversation with Mr. Lau, I normally get up at 5:15. Doesn't seem to matter if I don't get to bed until after 2:00. Feel like a zombie, but here goes. I thank Ms. Eliza Pin for being so courteous. Mr. Lau was not only courteous, but most friendly and willing to take the time to talk with me. They were also patient with me. I have a very low, soft voice and it couldn't have been easy for them to understand. Both of them speak very good english and were easy to understand. I went in straight up with him, thanking him for taking my call, telling him that we were simply a small group of investors that owned stock in his company and, because of the low price were buying more. That last week the one analyst covering Deswell lowering their rating and it had us concerned that something had happened. Mr. Lau didn't understand what I meant. I repeated by saying that the analyst had 'devalued' the stock. His response was "why would he do that?" Of course I said "that's why I'm calling you". In my experience, when you want to know things and the person is willing to talk, don't be interrupting with a lot of questions. The analyst putting down 'his company' upset him and he was very willing to talk. HE just didn't understand why the analyst would do that. I asked if he had talked with anyone recently and he hadn't. He supposed that they felt it necessary because of what's happening in the Asian economy and currency devaluations, but it definitely didn't have anything to do with Deswell's operations. I then asked what effect a devaluation of the $HK would have on the company and he said very little, only 1 to 1-1/2% of monies in $HK. They sell in $US, pay material costs in $US. Can't see any way it would have an effect worth worrying about. Mr. Lau then began a long discourse on the company, insiders, the stock market, tour for investors prior to the IPO, company policies, and many other things. To summarize, he and the other insiders own the majority of the stock and will be keeping control of the company!They needed the investors and may need them again in the future, but they run the company as they see fit. Insiders receive very little compensation other than dividends and some stock options. He pointed out that the amount of stock options have been small, that the insiders convert the options and are forced to sell off part of the stock to pay the company for the options. They convert to increase the dividends. (China must not double tax or hurt them with capital gains like we do here) He makes no promises, they'll do the best they can. (At this point I interrupted to tell him that we had been very impressed with past performance and that he should be very proud of all that they've achieved in such a short time.) Mr. Lau went on to say that some of the board wanted to be more aggressive in growth, but the majority preferred growth while maintaining liquidity. (more on this later) He apparently is one of the more cautious. They have done well and it looks good for the future. "you will see a big increase in sales" A few more remarks then I asked "have you made more additions of machinery or facilities since the last report?" "we've leased some facilities and got some machinery from Toshiba. Some on the board wanted to spend big monies, but we decided to hold down the buying." Not real sure what he meant. After a couple of more comments, Mr. Lau asked if there was anything else I wanted to know. I got the impression he was ready for the conversation to end so I thanked him for taking the time to talk with me and wished him well. Mr. Lau responded by telling me that he enjoyed talking with me and I should feel free to call him anytime I had more questions or concerns. Friendly goodbyes. I am very glad I made the call. Very impressed with Mr. Lau, amazed that he was so open and friendly. I didn't get to ask some of the questions we had because it didn't seem appropriate to the conversation, but the amount I did get certainly eases my concerns. Haven't had time to evaluate, wanted to write it down while still fresh in mind, so decided to post. For what it's worth, Ron