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

To: Madharry who wrote (324)	12/12/1997 6:08:00 PM
From: Frank Chen	Read Replies (1) \| Respond to of 1418

You got to realize the risk in DSWLF is the Asian crisis. I heard the Chinese government is seriously thinking about devaluation of RMB and HK$. The reason is because the pricing pressure from other Asian countries that have already devalued. Since China is not making anything other than commodity, low-tech products, those foactories can easily move to Indonesia and Thailand to take advantage of the lower labor cost. Even though the currency devaluation means lower labor cost for DSWLF, but the potential of increasing competition from other countries do post a risk at present. With other currencies down 50%, the RMB could go down 20%-30% to stay competitive. I think it's wise to wait out the present storm and get back 2 weeks after the Chinese New Year, when the possibility of devaluation plays out itself. Frank

To: Madharry who wrote (324)	12/13/1997 12:59:00 AM
From: Ron Bower	Respond to of 1418

Armin, Others can answer better than me, but my opinion: Deswell is more diversified, not really a semiconductor company. South Korea, Japan, Malaysia, & Thailand companies have major problems due to the currency devaluation, particularly those with debt. Interest rates are going very high as the countries try to support the currency. Their assets have suddenly become virtually worthless. Their cost to buy raw material (and they all import) is very high. Their employees are being hit by inflation and won't be able to live on the devalued wage as they import food and other necessities. They have a lot of problems to resolve before they can begin to compete. Companies in Hong Kong, Singapore, & Taiwan are not being hit by these problems - except for property values. Those that are highly liquid with strong cash positions like Deswell and Namtai have major short term opportunities for profits and expansion. The other countries have major problems and cannot support their ailing businesses while the PRC has indicated a willingness to devalue the yuan if necessary to protect their economy. Companies with a real problem are those US companies that have taken on debt to make recent expansions, particularly those expanding into the ailing Asian countries. We are looking at the possibility of a large increase in the balance of trade deficit and deflation. Good for the consumer, but not for company profits. Just my thoughts, Ron