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

To: Vic Olson who wrote (633)	4/9/1998 2:28:00 PM
From: Ron Bower	Read Replies (1) \| Respond to of 1418

Vic, Good point. The Annual report states they have commitments with no particular supplier, preferring to purchase from the lowest priced and listed Japan, South Korea, and Taiwan as current sources. They bought over 6M tons in fiscal 1997 (more in '98) and this lets them get lowest prices. I noticed that their raw material inventory had jumped up on the Dec 30 report and surmised that a major portion of this would be resin bought at low end of the year prices. Raw material for Kwanasia and Kwanta would not be a major portion of their inventory. My premise was that Jetcrown had signed contracts for 1998 production and that the resin purchased would likely cost less than they had projected when pricing the contracts. At 44% of product cost, it could amount to considerable savings. I had considered currency devaluation in the three source countries causing lower resin production costs. I had not considered far cheaper petroleum costs for their suppliers, an even larger savings. A 20% reduction of resin costs would be a 9% reduction overall and >2% increase in bottom line for Jetcrown. Not a large amount, but Jetcrown is 100% Deswell owned. I know nothing about the resin or plastics. Would a small resin plant be a good acquisition with all the plastics extrusion being done in China? Ron