Dennis,
I taped the Conf call as I listened to it this weekend.
I highlighted those points that were not addressed by posters here. These points are important in the year 2000: cashflow, IDB grants, equity dilution, capacity expansion, etc.
Cash flow and product quality are the key to success in VLNC investing. I was happy to hear Lev emphasizing those points.
The learning curve for the competition will be steep (as confirmed by statements like "the OEM customer that issued the current $2Million PO, found the batteries from a second source short of specs").
I pointed out in an earlier post Re.: locking out competition from buying specific machinery. This is good for VLNC investors. jmo.
Lev also addressed well the question of VLNC being the single source supplier. Single source supply is a big issue in manufacturing. (Re.: MSFT monopoly!) It will definitely figure into price negotiations. My guess is that the "VLNC camel wants its nose inside the tent" for now. I wouldn't complain about the size of PO's for now.
40 potential customers testing for cell phones, PDA's, laptops, etc. If this is true, I see no need to get anxious about PO's like some investors do.
A few posters (including me) here have been exploiting market inefficiencies created by CC or shorts' gambit to drive down the price and accumulate shares at cheap prices. No brainer!
Another point that is somewhat negatively misinterpreted by posters:
This was in reference to a question about market share and applications for which VLNC battery is being marketed.
"...if we hit all targets, our market share will be reduced..."
This is my interpretation:
Lev is focusing on three major markets: Cell phones, PDA's and Laptops. Lev stated in the last call, "...there will be an explosion of cell phones..." We know that maximum production capacity is limited to the installed capacity at NI and Hanil plants. If VLNC targets several markets, they have two choices: (1) supply fewer batteries in to each market (that means "...reduced marker share..."), (2) supply more batteries (probably dominate) in fewer markets (Warren Buffet style?), because their production capacity is limited. I think this is what Lev meant. He talked so fast that some could have interpret negatively.
According to Lev, it takes "about 14 months or so" to bring a line into production. You can understand why he is concentrating on doing a good job in fewer markets than spreading thin in many markets. This strategy also offers lower marketing costs, lower re-tooling costs and faster revenue generation.
We knew two quarters ago (recall, last shareholder meeting?) that VLNC (NI and Hanil) lines are geared to making cell phones for several reasons: easy to get a high rate of production, supply large volumes per single customer, less time for "product designing in" compared to laptop, and, most of all, the safety and weight aspects, etc.
This is what led me to a conjecture, (long, long ago) that the first PO would be for cell phone (probably out of Hanil plant.)
In the laptop area, safety of manganese dioxide technology beats the competition, overwhelmingly! No question about it! With a projected use time of about 8 hours compared to 1 hr 40 min, VLNC ("only game in town" as mooter calls it) will be the single source supplier to many vendors that want to increase PC sales. My guess is that this will be the next major PO, based on reasons discussed above. (Lines are optimized for laptop battery production)
Good luck to all longs! Ram |
