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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: Razorbak who wrote (15168)	10/9/1999 9:32:00 PM
From: MGV	Read Replies (1) \| Respond to of 27311

Thanks Sam for the textbook definitions. As you've surmised, I've defined VLNC's condition as insolvent in view of its short term liabilities exceeding its short term assets, with short term generally meaning "coming due within 1 year or a normal operating cycle." Its consistent with the bankruptcy definition. As long as they are able to receive short term "fixes" (I use the word "fixes" with its lurid connotation because they are cash infusions that are coming at a heavy cost) to balance their short term assets and liabilities they can keep the story going and avoid default for the moment. That of course does not mean they are able to do the things consistent with a healthy business such as investing in R&D or building out sales channels. It does mean they are undergoing heavy dilution by selling new equity at such low prices. We all know equity capital is substantially more expensive than debt. Apparently VLNC management believes a debt issue would not be successful. Dilution may be a lesser evil than default but it is not a virtuous condition for the small investors that frequent this thread. I suspect Berg is willing to keep throwing money into VLNC because: a. if he loses it, it won't break him. b. if he doesn't, no one else will (unless they are getting the below market sweetheart deals). And c. Dawson continues to advise him that "success" is "just over that there next hill - Really it is!" Dawson may even believe it. The problem with c. is the VLNC management have never distinguished themselves for having good judgement over the years. Not once, even in hindsight. Witness the hot and cold Dawson to whatshisname back to Dawson with all of the wholesale changes in technology and other high ranking management. And the competition is not standing still. Therefore, they can't continue to wait for a view over the next hill forever.