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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: Pallisard who wrote (11070)5/9/1999 9:11:00 PM
From: FMK  Read Replies (2) of 27311
 
Comments on patents-
I posted this Saturday on Yahoo (minor revisions).

I believe almost $700 million per year is being paid in royalties by the liquid lithium ion people, which represents 8% of approximately $8+ billion. Where does Valence fit in? Here are some possibilities:

1-If the Japanese stay with lithium cobalt, as would likely be the case if Valence refuses to sell them licenses for use of lower-cost and safer manganese oxide and associated processes; and nothing better comes along, most of them will want the 40% performance boost by paying royalties to Valence for use of their patented phosphate formula. I understand the phosphate formula can theoretically be applied to 100 different metal oxides that could possibly be used as cathode material, and therefore has a broad range of battery applications.

2-Valence may license the use of manganese oxide and phosphates both to other battery manufacturers. Again, if nothing better comes along, I would expect the combined royalties to eventually at least equal the royalties now being paid by the liquid lithium ion manufacturers including cobalt.

I believe switching to the phosphate formula can be implemented relatively easily since it requires a change in chemistry and a minimum change in the overall battery construction. Most of the existing factory process and machinery will therefore not require modification. Implementation can therefore be made much more rapidly than the transition from NiMh or NiCad to Lithium Ion.

3-As CEO Lev Dawson explained during the last conference call, the lower cost and inherent safety of Valence's patented manganese oxide cathode formula leaves them presently alone with the capability of making safe large batteries for laptops computers and other devices requiring other than tiny batteries. Most competition is presently forced to package multiple metal canisters (typically 9 or 12 per battery pack) at much higher cost, weight and required space for the same amount of stored energy.
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