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

To: peter michaelson who wrote (914)	8/25/1998 2:36:00 PM
From: jmt	Read Replies (1) \| Respond to of 1418

Peter: I am not aware of restrictions concerning Chinese companies acquiring outside of China, but my suggestion is an acqusition in Southeast Asia. If Deswell is holding US (or yuan prior to devaluation), this would achieve the following: - Companies are on sale as a result of currency devaluations - Geographic diversification would allow Deswell to shift production to economically advantaged areas as business conditions change. What is the advantage of holding cash? I have not invested in Deswell as a conduit to a money market fund. I have implicitly asked Deswell as a shareholder to invest the cash in positive NPV projects, and entrusted management to do so. IMO If they cannot in this market find positive NPV projects,the cash should be returned to shareholders through a dividend. jmt

To: peter michaelson who wrote (914)	8/25/1998 5:48:00 PM
From: Ron Bower	Respond to of 1418

Peter, I also invested in Deswell because of it's strong liquidity and would be concerned about any acquisition that reduced liquidity. But - Suppose there's a plastics company in the region that's in financial trouble because of the Asian crisis. Or, there's a company in financial trouble that has a plastics division. Suppose the equipment or a majority interest could be purchased for a good price in either of these situations considering that they are competition and that the acquisition would expand Deswell's customer list. Wouldn't it be a good move on Deswell's part to make this acquisition if it would not cause a major weakening of Deswell's liquidity? I do not feel they should look at other countries for expansion nor should they look to anything other than plastics, their core business. Deswell is not big enough to cope with the different business and social environments required of an international operation. I feel they can do very well in China supplying for export and into the growing domestic market. FWIW, Ron

To: peter michaelson who wrote (914)	8/26/1998 9:23:00 AM
From: Ron Bower	Read Replies (2) \| Respond to of 1418

Peter, During the night I thought more about the situation in the world and Deswell making an acquisition. I also had a bad experience with an acquisition. Even though things might seem cheap now, the world economy is such that they will likely get much cheaper. That acquisition that seems like a good buy probably won't be around when this is over. Right now, there are many companies that are trying to stay in business that don't have a chance of succeeding. You are right. Deswell should sit on any cash and continue to run a tight ship until the current situation plays itself out. Then, because it has the cash, they should be able to continue growth. The current economic situation is going to get worse and last much longer than anyone thought. Hopefully Deswell can continue profits and dividend payments because most companies will not. FWIW, Ron