VALENCE TECHNOLOGY (VLNC) Message Board

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Technology Stocks : VALENCE TECHNOLOGY (VLNC)

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To: Alex Fleming who wrote (48)	2/1/1997 12:20:00 PM
From: FMK	of 27311

Alex- I haven't been able to resist more production/revenue computations. Here are my latest - I invite feedback from anyone to confirm or refute. Best scenario: 1st 4 lines are all running 3 shifts - Approx Dec '97 Company's goal of 40% profit = $4 for est $10 wholsale cellphone batteries, $8 for est $20 wholesale computer batteries. Line 1 - a mixture of orders & test runs---------2 mln x $4= 8 mln$ plus 2 mln x $8=16 mln$ Line 2 - Large OEM order cellphone batteries 21 mln x $4 =84 mln$ Line 3 - Large OEM order Laptop batteries 7 mln x $8 =56 mln$ Line 4 - 50/50 mixture 3.5 mln x $8 =28 mln$ plus 10.5 mln x $4 =42 mln$ I'm having trouble making a table! =total $234 mln Apply a "real world" factor of 75% for production and pricing: 175mln Look at prior year op expense (avg 20mln) + add $10mln -30 (this includes a wild guess for new equip depreciation) Taxes after 1st 100mln(45 x .35) -15.75 ----- This leaves $129mln/21.7 mln sh = $6/sh earnings for 1 yr production in Ireland. Shouldn't we expect a P/E of at least 10? Why not 30 for a growing high tech company? More than once I heard that the market is so strong that the company would have no problem selling all it can produce. When the orders come, why not run 3 8-hr shifts/day? I am sure the company would elect to reinvest a good portion( 50% ?)of the profits for expansion, lowering earnings to sustain growth. This leaves $3/sh x P/E (let's use 20) = $60/sh market price for the stock. It's hard to imagine a worst-case scenario because it seems to all be coming together - this is where the caliber of management shows up. Remember we have some seasoned veterans, including 2 who started Seagate! Thanks in advance for your thoughts - to anyone who can contribute.

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