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Technology Stocks : DII Group, Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Creditman who wrote (1679)	6/24/1998 6:15:00 PM
From: Nevin S.	Respond to of 1845

Not only does HP reduce cost but they remove these assets from their balance sheet. From their perspective, the production facilities that they are selling to Dii may dilute returns on equity. For Dii the hope is that they will be able to operate more efficiently as manufacturing is their business, and, they can beat the bushes and find more production business to run through the plant to optimize its operating leverage. My guess is that Dii will pay HP a portion of the cost up front and then amortize the balance over the "supply-back" period (3 years) essentially paying HP back with proceeds from the added business.