D-Link Zips Ahead On Buyback Buzz

The share price of D-Link India spurted by 9.97 per cent today to close at Rs 65.65 after the company said that it was considering a buyback offer.

Marketmen feel the company may price the buyback in the Rs 90-100 range. Around 2.59 lakh shares of the networking company changed hands on the Bombay Stock Exchange and 5.40 lakh shares on the National Stock Exchange yesterday.

D-Link has convened a board meeting on August 9 to consider the buyback proposal. The stock has recovered after a sustained fall on the bourses in the past few weeks amid some intermittent small rallies.

From Rs 114.50 on May 6, 2002, the scrip tumbled 47.8 per cent to Rs 59.70 on August 1, 2002. The share has a face value of Rs 2.

The recently declared first-quarter results of D-Link indicate an improvement of fortunes in its core business, networking.

D-Link's main business segments are networking and software. The networking market has been going through tough times for most part of last year.

For the first quarter ended June 30, 2002, D-Link posted a 10 per cent rise in sales at Rs 38.85 crore and a 12 per cent growth in profit after tax at Rs 5.75 crore.

During the quarter, D-Link received major orders from banks, insurance and defence firms. The company has launched a range of new generation high-end products such as layer 3 switches to further strengthen its presence in the enterprise networking segment.

D-Link recently entered into a tie-up with Gigabyte Technology, Taiwan, for the marketing and manufacture of motherboards under the brand name 'Digilink-Gigabyte'.

Founded in April 1986, Gigabyte Technology is one of the largest motherboard makers in the world and ranked No 3 worldwide in the motherboard market.

The company claims that its foray into motherboards has met with unprecedented success and its 'Digilink-gigabyte' motherboards have captured over 10 per cent market share in a short time with all major original equipment manufacturers now among the company's customers.

In software, the company is into the voice over Internet protocol segment. Promoted by a first generation entrepreneur K R Naik, D-Link commenced business in 1993 and is part of the multinational D-Link Corporation Group of Taiwan which has a substantial financial stake (34.51 per cent) in the Indian company.