Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Ron Bower who wrote (918)	8/26/1998 11:29:00 AM
From: peter michaelson	Respond to of 1418

Ron: Well, I think you are right but I hope we are both wrong. OTOH, I bought puts on the S&P 100 in 1990, so what do I know! The problem with SI is that there are so many competent people that we do not reflect the market as a whole. SI in general seems very, very bearish - a bullish sign?! Peter

To: Ron Bower who wrote (918)	8/26/1998 11:38:00 AM
From: jmt	Read Replies (1) \| Respond to of 1418

Ron and Peter: You have just won the conservatives of the year awards. And Ron, in addition to predicting currency devaluations you are now a global economist. <g> Seriously, the argument of how much cash is the "right" amount is quite subjective. The strong balance sheet is an asset only up to a point. Once bankrupcy is remote, the market does not pay an incremental premium for the cash as much as they do a growth business activity. To even be close to having a cash flow problem, Deswell would need to burn through all cash and then exhaust all potential debt and equity financing options. They are light years away from this. A dividend is not necessarily an effective strategy for enhancing shareholder value. The income is taxed as part of operations and taxed again as ordinary income. And reasonable debt levels also add shareholder value from the tax reductions on interest expense. The company has proven its ability to effectively execute a successfull business plan better than most competitors. As the asset base has been built with cash, receivables and inventory, what do you suppose has happened to the companies ROA. I would hope this management of whom I respect could do better with these assets than is currently being done, without adding undue leverage. And I will be happy to grow my portfolio with capital appreciation rather than (boring) dividends. Best of luck jmt