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

To: Michael Burry who wrote (1232)	3/25/1999 8:19:00 PM
From: mod	Read Replies (1) \| Respond to of 1418

Q. Why haven't they dropped the F, like most other foreign companies have?

To: Michael Burry who wrote (1232)	3/26/1999 1:48:00 AM
From: kolo55	Respond to of 1418

Just how bad is it at Kwanasia & Kwanta ? Are they (K&K) losing money? What is the plans for a turnaround? When might we expect to see a rebound in sales at K&K ? Paul

To: Michael Burry who wrote (1232)	3/26/1999 8:27:00 AM
From: Ron Bower	Read Replies (1) \| Respond to of 1418

Mike, I'm with Paul - K&K are the drag on revs and earnings even though only 50% of total. As I get it, they only added (from memory) $160K last Q and this is getting close to a loss. Jetcrown seems to be doing well. I looked back and the best Q I found for Jetcrown was $12M revs, $2.9M earnings, supposedly operating around 75% of capacity. Do they see strength long term for Jetcrown as indicated by the buying of the new mold making machines? Share buyback? I don't care about price support - I think it's a good investment for the company. Namtai/Albatronics - benefits to Deswell? MITA!!!!! Situation on Mita and Kyocera? InterTel and Behringer. For Kwanasia revs to have fallen so much, these two must have lowered orders substantially. Got more, but it would get trivial. I added a little at $9.00, but have held off on more because I haven't seen any buy side strength and felt it might get lower. I may add today. My desired position is 1/3 above the amount I now have. Thanks for making the call, Ron

To: Michael Burry who wrote (1232)	4/3/1999 1:19:00 AM
From: Ron Bower	Read Replies (1) \| Respond to of 1418

Mike, Decided to post some of my work on Deswell. Breakdown of prior Qs explains many things that have been happening. If you get the chance to talk to Mr/ Lau, you might try to clarify some of the conclusions I've come to at the end. Contribution to earnings Approximate Revenue (In thousands) Q K&K Jetcrown Total K&K Jetcrown Total 4Q97 538 1694 2232 6355 6320 12676 1Q98 584 2095 2679 6766 7817 14584 2Q98 828 2399 3227 9132 8951 18083 3Q98 1344* 2853* 4197 8348 10645 18993 4Q98 533 2335* 2868 5797 8712 14509 1Q99 701 2461 3162 6264 9182 15447 2Q99 748 2582 3330 6160 9675 15795 3Q99 159! 1989 2048 5187 7425 12612 The numbers are not exact because I based the individual rev numbers on average margin percentages, but they should be reasonably close to the actual numbers. If you add the '98 Qs, you'll see more revs to Jetcrown than listed in reports. The sales from Jetcrown to Kwanasia are eliminated in the combined book accounting and the above puts the revs back to Jetcrown rather than to Kwanasia. (*) 2Q & 3Q98 Kwanasia was given a large order by a customer, (InterTel?) that inflated revs and earnings. Jetcrown began supplying VTech in the 4Q of 99. In the 3Q of 99, Mita reduced orders by 50%, VTech slowed orders, Namtai was down. This is reflected in Jetcrown's revs and earnings. BUT! Look at K&K earnings contribution in 3Q99. What has happened? Mr. Lau stated that it was due to lower PCB sales, but - there were prior Qs with revs not much higher that did not have earnings this low. When I compare the 3Q to the 2Q, The Gross Profit margin has stayed consistent, GS&A numbers have increased slightly in spite of a 20% sales drop, taxes payable suddenly jump from 101K to 433K and taxes receivable drop from 366 to 228. This tax adjustment lowered earnings by 470K - around 9 cents a share. Guessing- K&K taxes were mistated in the prior Qs and the next Q will not have this adjustment (Taxes are complicated in HK/China so this is likely an honest mistake). Kwanasia is paying lease on two facilities. They are writing off the $2M invested in the new Kwanasia facilities and this will continue to effect earnings but not cash generated. Going forward. K&K earnings will be higher. I think the Lease on their old facility has now expired. Taxes should now be right. Even at the low sales level, I expect K&K to contribute at least 300K/Q. Jetcrown - Three major items on the Balance sheets. Inventory last 3 Qs of $8,354K, $6,615K, $5,485K Prepaid expenses of $2,454K, $1,972K, $4,159 Customer Deposits of $4,508K, $3,697 to $4,293 My interpretation- Inventory - drop due to low completed product = lower sales Prepaids - Jetcrown has bought resin to lock in price for new orders Customer Deposits - customers paying for molds for new products This would be consistent with the 'mold making division being at full capacity' and buying new machines - also consistent with the info provided by HK_Traveler that plastics production is near full capacity. Putting all of this together, I've estimated 4Q revs for Jetcrown around $9M and for K&K slightly under $5M, combined earnings around $2.6M or .47 EPS. I also expect revs and earnings to increase the rest of the year. JMHO, Ron