Robbie, what you are saying makes a lot of sense and
is a constructive suggestion - demand actually, but
very, very reasonable given all we have been thru!
I disagree on several small points:
1) I don't think many longs of much sophistication
are at all surprised by the plan or the timetable.
I don't believe "the street" is trading out based
on the call. Everything said is 100% predictable
given what we already knew about the situation,
the selling cycle, the need to close new business,
the fact that this was known to be a 'turnaround'.
Hoping for any more than we heard was wishful
thinking,
2) Don't jump to conclusions that you will have to wait
a year for signs of success and stock appreciation.
Stephan said he would not name an OEM until the end
product is on the street, but he said nothing to
preclude announcing a "major design win" once he gets
far enough to know it's going beyond pilot levels of
production. Even given past disappointments, such an
announcement say in late fall, is still a very possible
catalyst for the stock to double overnight and treble
in a week.
I don't think anybody expects to get back to $20 and beyond
without seeing Stephan execute at least 4 Q's, but still
to me the risk/reward ratio looks better than ever given
this market. If Stephan executes with any degree of
success I see the stock at 2-3 times current price in a
year. This is no longer a mo-mo market. CSCO, SUNW,
etc are expected to return 10-20% at best in that
timeframe. Yes, there is a risk that the things don't
go as planned, but this has always been a high risk stock.
I also think the risk/reward profile for OEM's designing in
Vlnc batteries to their laptop line is essentially the same
as it was before. I.e. Valence's chance of success in
selling to an OEM is not affected by the performance of
the economy. The OEMs are designing new systems no
matter what. Even in a sluggish environment, any major
laptop design win is huge for Valence. Hence i see this
as a rain-or-shine play where key varibles for appreciation
are largely independent of the pace of economic recovery.
That having been said, it is likely that until major
milestones are met, support for the stock will fluctuate
with the market, possibly with a continuing high volatility.
It's also quite true that this is a very high risk
situation not for the fainthearted. If Stephan and this
team fail to execute those who are slow to abandon them
are going lose a lot of $$$ from here. There will not be
any "A-team" to go to after this one!!! |
