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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: FMK who wrote (10545)4/20/1999 12:21:00 PM
From: P. Ramamoorthy  Read Replies (1) of 27311
 
FMK - Re.:"...1 shift per day on three "lines" could very well earn over $1 per share. A PE multiple of 30 would then indicate a $30 share price..."

Interesting calculations. They seem to emphasize VLNC capacity to produce, but not the actual sales. The actual sales, revenues, and profit, cash flow will help determine the future stock price and p/e.
(1) Instead of estimating VLNC capacity to produce, we need sales contracts announcing either the total $ sales figure or the unit sales to customers. AND need a deadline for delivering those goods.
(2) P. O. news will come from OEM's like MOT or Energizer or whoever that actually supplies batteries. VLNC may not control the release of such P. O. news. It is fine with me, if I have to wait for the 10Q to find out about VLNC's delivery of goods or P. O.'s.
(3) the actual margins should be confirmed in the 10Q reports. The 50% margin assumption may not hold good after you account for SG&A, royalties, and other overhead expenses. This operating margin should improve over time.
(4) I discount income from licensing for a year or two. I do not see any evidence of a support organization for licensing. It takes time to market technology.
(5) Assigning a P/E or 30 or the S&P average 25-27 may be optimistic for R&D stage companies, with risk factors. I'd prefer a P/E of 10-15 range for the year 1999. Future P/E's will depend upon their long term performance. Just my opinions. Ram
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