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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: Greg Smith who wrote (4995)11/13/1998 4:07:00 PM
From: Zeev Hed  Read Replies (3) of 27311
 
Greg, not only do they need to hit the milestones, they will need more money if they hit those milestones. They will run out of cash comes the first of the years, let even say that they ship humongous $5 MM in the first quarter of next year, being on the beginning of the yield curves they will probably break even at best, and possibly lose operationally. Furthermore, they will now have to finance receivable and inventories as well, which should add a cash requirement of about $10 to $12 MM in the first quarter. Some of that might be available from existing preferred holders (I believe they have the option to double up if the milestones are met), but if they do not meet those milestone, or, if Mr. Murphy has another round with them, I would have to say that the stock is quite fairly valued or even overvalued here.

Zeev
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