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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: Paul Dubsky who wrote (1242)11/3/1997 2:00:00 AM
From: Larry Brubaker  Read Replies (1) of 27311
 
Conservative Red Chip Numbers

I spent a couple of minutes looking at Red Chip's numbers.

They assume full capacity for Line 1 (PC batteries) would amount to 2-3 million units, and a selling price of $20 per unit.

They assume full capacity for Lines 2 & 3 (cell phone batteries) would amount to 7-8 million units, at a selling price of $8 per unit.

Assuming the lower numbers of 2 million units for Line 1, and 7 million units for lines 2 & 3, and assuming Red Chip's selling price numbers, full capacity would generate $152 million per year from these 3 lines. Yet Red Chip's FY 99 revenue projection is only $56.5 million.

Their 4 Q 98 assumption is one production shift per day at 50% capacity. They say their projection for FY 99 assumes a gradual expansion of capacity and additional shifts. Given the difference between $152 million (full capacity for a year using the lower of their numbers) and $56.5 million (their actual projection), it is obvious that they are projecting a VERY gradual increase in capacity and shifts.

They also do not appear to be factoring in a 4th Line (which they mention as being ordered for mid-April), the $32 million rebate, or any joint ventures. So, it appears their numbers are EXTREMELY conservative.
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