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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: MGV who wrote (14091)9/1/1999 1:45:00 PM
From: MGV  Read Replies (1) of 27311
 
One clarification to this point: "The company isnt failing because the stock price is down, the stock price is down because the company is failing for the reasons stated." Though that is the correct cause/effect characterization, at some point both conditions have a causal relationship and create an unvirtuous spiral down. It goes like this: VLNC desperately needs capital to execute. VLNC would like equity capital. VLNC cannot afford equity capital if its share price is too low. If VLNC cannot obtain capital, VLNC cannot execute and VLNC's share price goes down. And the analysis repeats to oblivion. VLNC desperately needs its share price to go up yet the share price keeps going down. They have been trying to get their share price up since at least February and could not. Finally, in June and July they sold equity at then low prices because they were desperate for capital. Why were they desperate? Why do I characterize it that way? There are a number of signals. One prominent one is that they sold minimal amounts each time - apparently, given their balance sheet and income statements, only enough to make it "one more month" then "one more." There is no question, VLNC is in a dire situation, racing the clock now and apparently losing the race.
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