Stockvictor, in an earlier post alluded to some
mixed messages regarding the various capacity
expansions that have been announced versus when the benefits
to revenues & earnings are expected. goodtiming made
quite an astute observation in associating the Q1
revenue increase to the $4.5M expansion announced last
summer on 7/28/99. I've gone back through and studied
the PR's since 7/28/99 and will give a summary of
what what was said, what was incorrectly stated and
provide a forecast given the additional capacity that is
yet to come "On-Line":
announces $4.5M expansion with plans to have it "On-Line"
by the end of Q4-99.
expansion is currently being implemented and the additional
25% capacity that it's providing is already "Sold
-Out". Therefore additional expansion is being planned
12/7/99: $6.5M expansion is
announced to add another 40% capacity to DIO-China and
therefore bring the entire expansion to 65%. The original
$4.5M expansion is "Sold-Out" through
1/27/00: Company states that the $11M expansion will start
contributing to rev. and earnings in Q2 and Q3 of 2000. In my
opinion this is a mis statement. The $4.5M expansion is
"On-Line" and operating at full capacity as of the
beginning of Q1 which is consistent with the original plan
and as credited by Chen for the excellent Q1 results.
It is the $6.5M expansion that will be "On-Line" by
the end of Q2-00 and contribute to rev. & earnings in
4/6/00: $9M expansion is announced to add another 30%
capacity to DIO-China on top of the 65% that was added by
the original $11M. This expansion is scheduled to be
"On-Line" by end of 2000. The original 65% added capacity
is reported as being "Sold-Out" and thus
necessitating this additional $9M expansion. Furthermore the
1999 expansion plan (of $11M) should be at full
capacity by mid-2000.
4/27/00: Credits Q1
performance to the success of the $4.5M expansion and better
pricing. Expects the $6.5M expansion to come on line in
mid-2000. Reaffirms that the $9M expansion should be
"On-Line by the end of 2000.
benefited fully from the $4.5M expansion operating at 100%
capacity and yielded approximately $4.5M in more revenue
from Q4-99 to Q1-00. Therefore Q3-00 revenue might be
pegged at $34M (27.5 + 6.5) with Q2 somewhere in between
$27.5M and $34M. If business conditions persist Q1-01
revenues might be pegged at $43M (34 + 9) with Q4
somewhere in between $34M and 43M.
See Part 2 for
Earnings / Stock Price Forecast.
> While I too am dismayed that
> chose to expend effort deriding your eloquent
Hey gang, I had a smiley face in the
Dismayed, deriding, eloquent? Sheesh, we are looking at too
many fancy words here for a single sentence. I'll
accept the blame when I started with "moribund". I
promise to stick to words less than 5 letters from now on
Are you, by chance, bilingual? Did you do any
overseas assignments? Are you simply well-read? You
demonstrated an understanding of international business in
countering Bohous's ignorance that many in Bohous's
foreigner-phobic camp seem incapable of conceiving. The incredibly
valuable priveledge that Diode's has as an established
producer in China in being allowed access from the Chinese
government to sell to the ever more so lucrative Chinese
market was not something I would expect an average
person to be aware of.
like China, also have the tendency to be corrupt and
will even limit internal competition to the
established wheel greasers. Having worked years in Mexico,
I've often surmised that DIO mgt must be using
strategic gifts of stock grants to Chinese bureaucrats to
build the relationships required to succeed in the
environment they are in.
While I too am dismayed that stockvictor chose to
expend effort deriding your eloquent analysis
correlating 200 day moving averages with earnings, I have to
say that your idea of a fundamentalist investor is
quite different than mine. Although no official
definition may exist, here's my take a la you know you are a
red-neck if... I hope anyone that anyone who steps up to
critique the list is gracious enough to suggest
alternative replacements for what they consider weak "you
know ifs". Here goes.
You know you are a
fundamentalist investor if...
1) Charts to you were designed
for the same crowds that hope to get rich by gambling
(either Vegas or lotto style) or have faith in
supernatural phenomenon (e.g. horoscopes, tea leaves, palm
2) A daytrader's mental and moral
mindset can best be found in the same people who pay
prostitues for sex.
3) IPO to you means Isolent Populace
4) Before looking to see how far a stock can go up,
you first check to see how far it could go down.
(i.e. debt/equity and price/book and history of
profitability, in that order, mean more than P/E, P/R, or
5) Your keen awareness that the market either
deifies or demonizes stocks keeps you solidly scrounging
for bargains and disregarding hype.
increasing dividend announcement exites you more than a
7) You immediately start freeing up
cash the instant hints appear that the fed should
start raising rates.
8) When a trusted informer
recommends a stock, you take the time to read the last three
to five years of 10K and DEF14s and the most recent
10Qs from raw SEC filings AND those of the top two
competitors BEFORE considering investing in the stock.
You never buy a stock unless the company has a
significant competitive selling, cost or technological edge
and is well managed.
10) When sifting your
selections, you drop companies whose business you lack
adequate understanding of even if all the stats look good.
Paul Kangas, you gotta love him. Suzie's all
right too. But only Paul can rattle through those stock
lists of most actives and the movers in the incredible
fashion he does. No, I don't work at NBR, but you might
say I've been indoctrinated by the
Stockvictor, I'm disappointed. We fundamentalists are suppose
to love plotting, charting, pouring over the
financials and comparing all the pertinent ratioes like EPS,
P/E, P/B, P/R, PEG, etc., to that of the peers, sector
and overall market. The simple chart I explained is a
true fundamentalist's tool for taking historical
performance and forecasting future performance. I was
convinced you were a die hard fundamentalist and maybe you
are. However if you are, you need to create and
maintain the chart I've suggested. Although you claim to
sleep well at night owning DIO, this chart will make
you sleep even better.
You do raise an interesting point. DIO's
management and manufacturing is primarily in the east. To
some extents this makes DIO a foriegn play in the
Chinese market. This was not always the case but is
becoming even more of a factor. The recent VSH/LiteOn
transactions and new CEO are clearly indicative of
We have had some scares between China and Taiwann
and have discussed and followed these situations as
individual investors and on this board.
This, IMO, is
definately an exposure. It is also a benefit from my
perspective and one of the reasons I like this stock. The
Chinese economy and population is just now coming into
the new technological era. The components for new
devices are going to come more likely from companies that
are in China (they tend to be somewhat
protectionist). Having a strong, long established presence in
China positions DIO well for capitalizing on this
All that 200 day moving
logarithmic superimposing trailing correlation MA fluctuation
function talk is making me dizzy ;-)
important point you mentioned for any folks looking at
historical perspectives is that Q3-99 should really be the
pratical genisis of this company from an investment point
I think I can safely summarize your
comments as "earnings are going up, up, up. Buy, Buy, Buy"
Here's wishing you the best of "GOOD BUYS". Do
you work at NBR?
If you look at DIO's 5-year
chart, see the price fluctuations and are therefore
scared off from buying it based upon its current level
within this historical context then you're
misinterpretting the chart due to lack of information. I'd
encourage you to plot this 5 year chart on a log scale with
the 200-day moving average and then superimpose the
trailing 12 months earnings each quarter onto the chart.
You'll find an amazing, almost scary correlation between
the 200-day MA and the earnings. The price has not
fluctuated during the last 5 years just because its prone to
fluctuate. Price over the long term is a function of
earnings and the excercise I've suggested is proof of that
I'll admit that when I bought DIO in the $3 to $6
range beginning in Aug 98, I did so based upon the 5
year chart. It appeared that DIO was at a low, the
historical pattern would repeat and as soon as the stock got
to the $15 - $20 range I would sell. Then something
remarkable happened. There was a paradigm change in the
company's operation which was exhibited by a Q3-99 report
of .31 EPS. They went from the typical, historical
upcycle in earnings of .08 to .13 to .16 and then out of
no where .31 (best quarter in the company's entire
history). The expansion plans, the tight supply, the higher
unit prices suggest that you throw out the historical
5 year charts. October 99 ushered in a new day, a
new paradigm, however one thing remains constant -
price over the long term will follow earnings. The
earnings growth right now is unprecedented and all
indications are that we'll see continued growth for some
time. How long - I don't know. But what I do know is
that this is stock you want to be in right now. The
risk to reward ratio is an investor's dream. All I can
say is I'm glad I chucked my original plan which was
to sell at $15 to $20. 6 months to a year from now
I'm convinced that I'll be glad I didn't sell at $38
also. Here's wishing you the best of "GOOD BUYS".
I wish I could call myself like that! Yes, I am
basically a shorter and a part of my philosophy I described
previously. I came across Dio at IRF board and shouldn`t have
even commented, but I am glad you did enlighten me; if
I was a long term investor in DIO, surely, I would
do more of my DDs.
Still, three things about DIO
would prevent me to buy: the 5 year chart fluctuation
/although I grew up in semiconductors and remember the
difficult years!/, secondly,/although I am not a racicst/
present top management is all Oriental and DIO Far East
mfg. locations give me chills.
But, I know nothing
about your protegee and maybe should apologize to you;
still, I will abstain.
Best of Luck!!
No, DIO is
not in my plans