<<Your story about VLNC interested me, but I found a lot of the stories in this thread contained quite a lot of hype.>>
That's the way I feel too. From these stories, it looked like VLNC has no competition in their targeted market. But reading the company's 10K (which is already one year old, hope to see the new one soon), there were several companies ready for commercial production of lithium polymer batteries in 1996. It appears that they were already ahead of VLNC.
From the 10K, at least 9 other companies have licensed the same technology from Bellcor, so we have at least 10 companies competing for the same pie. At the high end of estimate of $3 billion per year by 2000, and assume each company gets 1/10 of it, that's $300 million in revenue for VLNC. The competition makes high margin impossible, so let's assume a 10% net margin. That's $30 million net income per year by the year 2000. Give the company a PE of 20, the market cap would be $600 million. That's about 3 times today's price in 3 years. Not bad at all, but notice that I used the high end of everything in my calculations and assumed that VLNC can at least end up being average in the whole group even though some other companies may already have had a head start, and assumed that no further competitors will come along.
I find this is one of the few threads where people don't discuss about competition and negative scenarios. It is difficult to make good investment decisions without a balanced discussion. I am neutral here, and would like to dig out far more information before I make any move. But I do think the chance of VLNC going to 60 this year is zero. The market can be crazy sometimes, but not that crazy. From my initial crude analysis, I think the upside in 3 years is $30 and downside is $1. And if you believe Walonchuck, you should not be invested in either VLNC or IDTI. You should buy index options or index futures. If the DOW gets to 11,000 this year, you can make more than 10 times of your money. You could not possibly make that much from VLNC or IDTI.
Anyway, the stories here are quite intersting. I will call the company and all of its competitors after I am back from my vacation next week. I will post anything I find here if people want to hear.
Regards,
Xingbo |
