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

To: kolo55 who wrote (911)	8/25/1998 1:24:00 PM
From: Ron Bower	Read Replies (1) \| Respond to of 1418

Paul, From reading the PR, it appears the company was having some financial problems. $40M for a company with $40M revs, a modern facility, and a strong customer base seems low unless they're assuming debt. It would be the equivalent of buying Deswell's operation for about $11.75. At that price, it would pay for itself in about 3 years based on current cash flow with no growth. I can see why Deswell wouldn't have been interested in buying the company as the circuit board sector is already having problems. This obviously is a competitor of Kwanasia. Will DIIG limit it to board manufacturer? It would seem to me that they would add assembly and that might present opportunity for Jetcrown/Kwanta. I feel any growth in technology sector in China benefits Deswell overall in that it makes the OEMs look there for supply. I've been thinking about potential acquisitions for Deswell and have a question. How many of the ECMs have their own plastics division? Deswell's management started in plastics and it's their primary area of expertise. I would think that most ECMs don't have the knowledge or the desire to be in plastics as it does require expertise they wouldn't normally have, it would be expensive to set up, and the plastic is a minor cost to the end product. Wouldn't it make sense for Deswell to acquire a plastics competitor in another area of China that has ECM companies? Particularly one with a good OEM/ECM customer list. I have to think there's some that are having financial difficulties or needing to expand and don't have the resources. TIA, Ron