1. Production and Profit:
VLNC (Dawson) can represent that they have n to the x lines of capacity in September 1998 but if there is no buyer, any capacity to produce is valueless. There is credible industry evidence that neither VLNC nor any of the other Bellcore licensees are ready to produce commercially acceptable Lith Poly batteries let alone commercially acceptable lith poly batteries in volume. It is a given in the industry and with VLNC that once commercially acceptable batteries are developed, there will be a significant lag time before any product can be integrated into the design of the battery consuming product. Credible sources within the industry (read article posted by TMoore) don't mince words when they say that the earliest they expect lith poly batteries to be available on the market will be mid to late 1999. What does that do to FMK's convoluted, pie-in-the-sky postulation of $95 Million in net profit for 1999?
2. Competition and Proprietary Technology:
VLNC has no head start. By VLNC's own admission, the technology you represent gives them a head start (Bellcore) was licensed to at least 11 other firms. R&D is always relevant. Always. That is why Intel, Microsoft, Sony, and other dominant companies continue year after year to invest increasing sums in R&D. To say that VLNC's R&D "is no longer so relevant because they are gearing up to mass produce" is another patently incorrect statement. First, VLNC is not ready to mass produce. Again, credible industry information sources say that no one, neither Sny, Sanyo, Matsushita, nor any of the other smaller companies (ie VLNC) working on lith poly battery technology will bring batteries to market before mid to end next year. Second, no one stops R&D because the technology continues to evolve. You know that. Everyone knows that.
No other bellcore licensee is as poorly capitalized (and therfore at a greater competitive disadvantage in developing commercially acceptable lith poly battery technology) as VLNC. By any definition, their financial status is desperate. With negative working capital in March and no new capital since, what is VLNC waiting for? The logical conclusion is that they are trying and failing to obtain new capital at non-destructive terms.
Why would a company with a snowball's chance of earning $95 Million in net profit in 1999 (as FMK recently has promoted), with a current market cap of approx. $115 Million, isn't immediate prey to someone with the capital that VLNC does not have.
Wolanchuck: The street and history are littered with market timers who enjoyed their 15 minutes of notoriety. I'm reminded, when it comes to market timers, of the saying: "Even a broken clock is right twice a day." All of the great investors of our day, most notably Buffet, eschew market timing as folly, something that sells newspapers, nothing more. Wolanchuck could not be proud of the unsuccessful record he has with respect to VLNC. Those following Wolanchuck's advice w/r/t VLNC have lost money because of the advice. FMK asks why should someone discount Wolanchuck's VLNC recommendation "so quick." So quick? VLNC is approaching insolvency. How many more dollars do you expect people to contribute to VLNC and how many disappointments must they endure before concluding that Wolanchuck's and FMK's touts may be flawed? |
