FMK, saw this on the AOL thread and thought I would repeat it here. BTW I was responsible for 5% of yesterday's volume, on the buy side.
Jeff
To one of you having SI posting privileges -- please post this on the VLNC SI thread. I haven't coughed up the necessary coins. Thanks.
To FMK and others:
Fred, I think you're correct in what you say (re price per unit of production capacity, VLNC vs. ULBI), but the bottom line is the bottom line. That is, the earnings per share is the key, not the revenue per share or production capacity per share. (I am assuming in the following that VLNC revenue per cell will be the same as ULBI's revenue per cell --- for the same cell size.) When considering the earnings per share, you gotta believe that VLNC's cost of
production will be lower on a unit basis than ULBI's. I heard that ULBI has 150 workers busy as little bees manually assembling their batteries. Even when they get the slow-speed production line running, their unit manufacturing costs on their slow-speed line have to be much higher than VLNC's on their high-speed lines --- their fixed manufacturing costs (like the plant manager's salary, etc.) will be amortized over a much smaller number of cells. Furthermore, VLNC has vertically integrated by establishing their own laminating line. This has got to lower direct material costs considerably (compared to buying laminate from an outside source). This should further
lower unit manufacturing costs. Then there's the effect of the large
production volume on amortizing overhead (Henderson costs, etc.).
Then there's the consideration that the first to market with serious-volume manufacturing capability will likely grab the largest market share --- market share that others will have to fight hard to win. This consideration, however, is very subjective and hard to value.
I think that VLNC is even more attractive than you are suggesting when you look at it on a potential earnings-per-share basis.
I look forward to your thoughts and a great '98 for VLNC.
Regards, Tackman |
