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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: Zeev Hed who wrote (6997)1/12/1999 9:45:00 AM
From: mooter775  Read Replies (2) of 27311
 
My only information regarding gross margins, came from an extensive discussion with a former CFO of the company about a year ago, wherein he indicated that he expected the gross margins to be about 40% when they were having discussions about selling the laptop battery at $ 20 or so. That implies a direct manufacturing cost of $ 12 or 60%.

I think the company has not only lowered the RM cost and improved yields, but the discussions seem to be around $ 70 - $ 75 per battery
(30 watt hours at $ 2.50/wh). This would imply, if the costs hold up, gross margins closer to 80%. I've adjusted downward for yield and shaved the number to 60%. And I'm more interested in 'run-rates' of production than the initial startup. I'll acknowledge the requirements for working capital which the company must finance, but my own feeling is that will come in hand in either bank or bridge financing (non dilutive or minimally dilutive) at or around the time that contracts are announced.

And I think the operating leverage in the business is really exciting, since I am expecting more than one shift of production on more than one line in the coming weeks. To me this company continues to be a questions of "when", not "if" and I'm willing to play the waiting game.
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