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

To: j rector who wrote (1148)	1/10/1999 12:49:00 PM
From: Ron Bower	Respond to of 1418

j, I have reviewed for myself and have come to no conclusions. Too many variables and not enough information. I would say that we can expect no surprises, up or down. I believe, repeat believe, that the Mita sales are much higher than 50%. Mita has announced many new products, Kyocera has put out a major advertising campaign in Europe for Mita products, some Mita suppliers have run out of certain products. All of this indicates that the objective of lowering inventory has happened with 50% less production and that the production should have been increasing. The fall off in Namtai sales was almost insignificant as the sales to Namtai had become such a small portion of Jetcrown's overall sales. A year ago we didn't have VTech and those sales have to be growing according to VTechs report. I believe VTech sales to be strong enough to offset any lost sales to both Mita and Namtai. InterTel has been expanding business at 25-30%. Everytime they get a new customer, they sell them the phones that Deswell makes. I have been told that they now have new hardware that will let them go after larger customers and this means even more phone sales. This may not impact this Q, but should provide major sales in 1999. Behringer - they were growing fast but I have no idea if they have been able to continue this growth. They're buying of more Deswell stock is an indication that they 'thought' the growth would continue. I believe they should be getting new business, but won't report it. It was an embarrassing situation when they came out and said the Mita bankruptcy would not be detrimental and then had to reverse themselves. I think they are being very tight lipped because they don't want to indicate any optimism they can't fulfill. In the past, they made virtually no optimistic announcements except to say in the reports that they were expanding to meet increased customer demand. Even getting the VTech business didn't come until VTech was 8% of total revs. They were very quick to come out with the negative Mita and pessimistic in the last Q report even though they expressed optimism in the Annual Meeting. Have they been buying back shares? Last year we had $4.2M earnings and full dilution of 5.362M shares for .78. Last Q we had 5.5M shares, but this was down from 5.623 the prior Q. The dilution could be as low as 5.123M. Last year they had an order surge from (IMO) InterTel that caused a jump in 3Q, but lower growth in the 4Q. If this 3Q comes in at $3.6M or better, I'll be happy. With the $6.5M earnings already reported we would have $10.1M for the 9 months and can be confident that they will exceed last year's $13M earnings. Based on last Q's dilution of 5.5M, I'm hoping for an EPS above .66. With the yen strength and financial situation in Asia, I expect very strong growth in 1999. Sorry for being so long winded. JMHO, Ron

To: j rector who wrote (1148)	1/10/1999 4:37:00 PM
From: Ron Bower	Read Replies (1) \| Respond to of 1418

j, Reviewed my post to late to revise this: "I have been told that they (InterTel) now have new hardware that will let them go after larger customers and this means even more phone sales." THis came from a poster on InterTel, not from a Deswell source. I have had no contact with the company in months. I also missed your question about Q1 & Q2. I expect we will see little improvement in Q1, but growth starting in Q2 and accelerating thru 1999. Not only from increasing Mita and other current customers, but from new customers. JMHO, Ron

To: j rector who wrote (1148)	1/18/1999 6:08:00 PM
From: Ron Bower	Read Replies (3) \| Respond to of 1418

Thread, Been thinking (always gets me in trouble) A merger between Deswell and Namtai? It occurred to me that Deswell has Jetcrown, Kwanasia, Kwanta. Can't list them by name, but Namtai has electronic assembly in their own companies and with Albatronics plus minor plastics and metal stamping operations. At first look the strengths make a decent blend. Both companies are financially strong. Together they can cut overhead and streamline operations. Combined revenues would make the combination a mid sized company with good diversification that could compete with the larger ECMs. Your thoughts? FWIW, Ron