I N Vester,
I appreciate your belief that it will be any quarter now rather than any time now. I too belive the same and have repeatedly posted by belief that we should get an announcement of a material contract( > $2M) around April 15th.
There was a recent article about the palm pilot possibly having Li-Poly. At that time, I said the recent run-up in the stock would collapse because no announcement would be made and VLNC would head to 6.5 to 7. Others here said I was nuts, but today we had a trade slightly below 7. This stock will not stay up until there is a contract, even a tiny one. The technology is still unproven , but a small contract would reverse that opinion very quickly and permanently.
Why am I long ? Mostly FMK. I bought in a year-ago based on his analysis at 5. I sold at 8 during the run-up before the analyst visit because I wanted to lock in my gains to offset some loses in positions I wanted to get out of. I bought in again at lower levels as the stock continued to climb, thinking as did many on this thread that the visit would result in some good news. My experience of the stock has made me less optimistic. Unlike CSCO(a former employer) where its only a matter of whether earnings will increase 30% or 40%, VLNC is pure speculation. I have room in my portfolio for a couple of these. Its a high-risk high-reward gamble with little available public information. Call it gambling if you like.
After been on the losing end of a few of these, I look for signs that will get me out earlier rather than waiting for bankruptcy. Look at VLNC's last statement:
Three Months Ended Six Months Ended
September 27 September 28 September 27 September 28
1998 1997 1998 1997
Revenue:
Research and development
contracts $0 $0 $0 $0
Costs and expenses:
Research and product
development 4,708 4,427 8,738 8,462
Marketing 18 129 47 250
General and
administrative 1,319 1,462 2,257 2,798
Total costs and expenses 6,045 6,018 11,042 11,510
You see that marketing and GS&A has gone down, but product development has gone up. My read is that they are still trying to get a product finished. You don't cut marketing and admin if you were gearing up for a product launch. In fact, it tells me that they are trying to save on expenses by doing so. Hence, financing is very much an issue. If you had tons of cash and were optimistic that you would soon be selling product, you would not be cutting down on those two items.
If the accepted-as-fact rumor that 270 employees are now working, I would hope to see a couple of million added to the expenses. I would also like to see marketing and GS&A expense spike up rather than go down.
My numbers on the expense of the employees. I'm assuming that you are hiring semi-skilled assembly line type workers in Ireland, so I'm assuming a much lower total cost of $50,000/ yr.
Then 270 x 50K = $ 13.5 M / yr.
= $ 3.4 M / qtr.
Assumming an average time of half a quarter that all 270 were there, $1.7 M is expected increase in in product development expense.
So, I'm long because I'm speculating. I hope to get the huge returns FMK has been promising. I'm skeptical because experience has told me to be so when a company does not deliver. Its a trap when you keep thinking that it will happen next quarter, over and over again. Next thing you know your stock is worth zero. I intend to seriously look at a sell if no contract by June since competitive responses, financing problems, and massive dilutions will loom large at that point. |
