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

To: Ron Bower who wrote (634)	4/9/1998 6:22:00 PM
From: Vic Olson	Read Replies (1) \| Respond to of 1418

Ron, I see what you mean. Hadn't thought about connection between contract prices based on estimated raw material cost that likely have gone down. I worked in a LDPE extrusion business in the '70's. This is one reason why I was interested in Deswell. I can visualize the process and have seen the injection molding business (making school desks)in operation. There are numerous kinds of polymer resins. I am not sure what Deswell buys. As far as I know there are only big guys in this business. The little guys, Deswell size, are downstream turning resins into other products. Major resin suppliers include companies like Dow, Mobil etc. These are commodity products that require huge capital investments to produce the volumes necessary to make a decent return. The only small players in this business that make money are recyclers who buy scrap plastics, melt and re-granulate the material. There are quality, separation, and distribution challenges. If I could pass along resin costs in contract prices, I wouldn't want the headaches of this business. Would rather see Deswell buy more injection molding capacity if they can generate enough Kwanasia business or buy another contract manufacturer. Vic