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Diodes Incorporated Message Board

  • Go_DIO Go_DIO Apr 28, 2000 1:57 PM Flag

    DIO's Capacity Expansion (Part 1)

    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":

    7/28/99: Company
    announces $4.5M expansion with plans to have it "On-Line"
    by the end of Q4-99.

    10/28/99: $4.5M
    expansion is currently being implemented and the additional
    25% capacity that it's providing is already "Sold
    -Out". Therefore additional expansion is being planned
    for 2000.

    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.

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    • exhibited entirely too much sense for you to be allowed to continue to post on this board. Consider yourself on probation.


    • > 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

    • <EOM>

    • 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.
      Protectionist governments,
      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
      readers, etc.)
      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.
      6) An
      increasing dividend announcement exites you more than a
      stock split.
      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


    • Sheesh Go_DIO,
      All that 200 day moving
      logarithmic superimposing trailing correlation MA fluctuation
      function talk is making me dizzy ;-)

      One very
      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
      of view.

      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?


    • bohous91789,

      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

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