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Technology Stocks : VALENCE TECHNOLOGY (VLNC)

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To: Javelyn Bjoli who wrote (1379)	11/17/1997 1:11:00 PM
From: barrcuda	Read Replies (6) of 27311

To all, Good morning all, I just returned from Las Vegas NV. While there I drove out to Henderson and met with Dave Archibald for an hour or so. I must say he was quite the gentleman and he answered most of my questions. Let me run through what I found out. The cells: Valence plan is to manufacture two cell sizes for now. The cellular phone batteries are about one inch by two inches by about 3/16 inch thick. The OEM will arrange these cells in whatever way he sees fit and will make the outside cover. Dave said that two of these cells will be used in a typical flip phone but it looks like four will fit inside a battery housing. IMHO the fact that they are only selling the individual cells is good news. It means that they can sell to any or all battery sellers and do not have to worry about retail distribution of consumer batteries. BIG PLUS. Dave confirmed the 8 dollar price for these cells. The other cell is about 4 inches square and will be used in laptops. These can be placed in an 8 inch square pattern or stacked to fit into a CD ROM sized space. When I mentioned the 30 dollar price for these cells Dave said " at least that much". The finished cell comes off of the line sealed in a tin foil wrapper and looks very easy to ship. Testing: The OEM's have been testing the pre-production cells along with Valence. I asked about the tolerance of the 300 cycles recharge rate and 80 percent capacity. How many batteries can fail this test and still be successful. He said "that is a minimum number that all cells must attain". In other words any cell must retain 80 percent of it's energy storage capacity after 300 recharge cycles. He inferred that they have exceeded these numbers. Valence and the OEM's do not have full production cells to test yet. Dave says once the productions lines in N I are turned, examples will be sent to OEM for more testing. He inferred that the lines will continue to produce cells while testing is in progress so when testing is completed Valence will have an inventory to sell. By the way the production line can be brought up and down on short notice. It does not take a long time to get every thing operating and can be shut down for breaks and shift changes. Market: According to Dave, Valence has no plans to license this technology to OEM's. They are allways looking for JV partners with which to share the profits with. It seems as though Europe will be a large market. I asked if Motorola was their largest OEM, Dave said no. Dave said Motorola buys about 300 million cells of various sizes and technologies a year. When I asked about special chargers he said the cell phone batteries will not need anything new but the laptop cell will be offered on new machines incorporate charging circuitry . IMO It sounds like the laptop cell capacity will be consumed in the new market and they are not planning to market replacement cells at this time. They have no plans for the hand held tool market or the mobile two way radio market. The Li Ion cells are not compatible with the high energy output required by these devices. Dave went through the reasons they chose N I as a manufacturing plant. Valence received some very good incentives for this decision. You all know about the aprox. 35 million dollar tax incentives for machinery. They also are receiving tax incentives for training and employing local labor. The unemployment rate in Ireland was over 12 percent when they started and is still over 10 percent today. The labor force is highly educated and motivated. I asked Dave about the 50 thousand a month they receive from GM and was told they are looking at batteries for lights and ignition systems. Not so much for electric vehicles. I guess that's about it. I'll post again if I think of more. One more thing, and this is just my opinion. I left feeling very upbeat about this company and Dave did not say it in so many words but I felt that very good news is coming soon and the next year or two will be very exciting. DSW

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