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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: Larry Brubaker who wrote (16937)12/11/1999 10:46:00 PM
From: Zeev Hed  Read Replies (1) of 27311
 
Larry, I agree with you that my assumption of 50% gross profits and breakeven late nexy year is a best case scenario. I think that VLNC will do extremely well if they reach 80% yield in the third quarter of full production. Mind you, they need to keep the batteries for about a month after produced before they ship (at least that was what they mentioned earlier this year), so just inventory should be about 6 weeks to 2 months of the annual sales rate, and if that reaches $75 MM by this time next year, inventories alone should increase by $10 MM.

Nevertheless, if they get through the next few quarters without Murphy getting in the way (and Murphy had some history with VLNC), the market, if it is still in a mood similar to today's mood, could easily put sometime next year a valuation of two to three times sales expected in 2001, that means a potential of $30 to $40 sometime next year is not out of the question. Look at the current valuation of ANCR for an example of a similar situation.

Zeev
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