VALENCE TECHNOLOGY (VLNC) Message Board

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Technology Stocks : VALENCE TECHNOLOGY (VLNC)

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To: lws who wrote (6864)	1/8/1999 1:59:00 AM
From: MGV	Read Replies (2) of 27311

You are far too generous and untimely in choosing to decide that the financing issue is settled. For whatever reason, it has turned out that all predictions of the imminent demise of Valence due to lacking adequate working capital have proven wrong -- at least so far. There are several issues nested within the financing issue. The big one is solvency but, almost as significant to shareholders is dilution. Neither solvency nor dilution has been put to bed. This leads to your second assumption: Somehow, as per Fred's predictions, Lev has always managed to pull off something which allowed him to continue to hire (and hire a lot!) and to order more equipment. You mention labor costs and capital spending. Think of the implications. If there are 270 employees at work the burn rate is increasing rapidly. How long have you guys been counting 270? Still no word on revenue? The logical conclusion is that VLNC's cash coffers are again dwindling. It cannot continue without either insolvency or substantial dilution occurring. No matter how you spin the Castle Creek deal, no one knowledgeable in corporate finance could argue that the financing terms negotiated by VLNC were not of the character one would expect from a company in serious financial trouble. It is not the terms that a Sony or a Sanyo or even an R&D stage company with positive working capital would receive. VLNC is facing brutal competition with no apparent competitive advantage. It is severely underfunded relative to its competition. Its source battery technology is identical to at least eleven other competitors. If the company had a track record of savvy execution, one might reasonably overlook some of the disadvantages it faces. The fact is that management's record of executing is anything but smooth. The investment community (including analysts who might have been invited but did not go to Ireland and any who might have gone) does not believe VLNC can execute. The circumstances are worsening as time passes. From recent technical information, it is beginning to appear that Lithium polymer technology may offer incremental advantages at a substantially increased cost. Even more ominous is the hint that lith poly technology may soon be irrelevant. Why do you lws flagellate yourself with this company? If you want less risk there are many viable alternatives. If you want volatility and speculative opportunities there are ample other options in the technology space. If you are attracted to pie in the sky ventures, there are many choices with a much better profile on the dimensions outlined in this post. Look at the chart of this stock.

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