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

To: MGV who wrote (16146)	11/15/1999 8:04:00 PM
From: kolo55	Read Replies (2) \| Respond to of 27311

RayoVac gross margin is less than 50%. You wrote:ROV G/M reported at documented and independently verifiable 53%. Was klemencic "lying" or blind? Does it matter when it comes to his statements? MGV, it is interesting to me that you use the public databases for your numbers, instead of getting them directly from the company financial statements. I have found the financial databases incorrect so many times, that I would never use them to support my investment decisions, let alone argue a specific financial indicator like Gross Margin. You need to learn not to believe everything you read, and to think for yourself. Remember that capitalizing on inefficient markets, requires independent analysis, so that you are not drawn into the consensus view, when the consensus is wrong. Here is an excerpt from RayoVac's latest financial news release. Please note that the Cost of Goods Sold exceeds the Gross Profit for all periods reported in this report. Thus Rayovac's gross margin is less than 50%. For the last year, it has been 47.9%. You lose this argument based on the facts, and because you were too inexperienced to realize the public financial databases are often incorrect. THREE MONTHS TWELVE MONTHS F1999 F1998 % 1999 1998 % INC(DEC) INC(DEC) Net sales $172.4 $138.6 24% $564.3 $495.7 14% Cost of goods sold 90.0 72.3 293.9 258.0 Gross profit $82.4 $66.3 24% $270.4 $237.7 14% Even more important than the fact that you are technically wrong, you have committed a more grevious mistake in your comparison of Valence forecasted PSR to Rayovac's PSR. Rayovac is a consumer product company and spends an significant amount of their revenue stream on advertising, almost 28%. Since Valence is not a consumer products company, they will see sales expense far less than 28% of revenues. If Valence hits a 65% gross margin, which I believe is possible, and Sales runs about 8% and G&A runs about 7%, then Valence will have about 50% profits before R&D, interest charges, special charges, and taxes. Compare that with 11% for Rayovac, and you can see why Valence could easily be valued at 5 times run rate revenues versus Rayovac's 1.1 times run rate revenues. You have a lot to learn about investing. (BTW I am a few thousand shy of a million dollars paper profit in Valence at today's close... And you lost over 50% of your investment in Valence? Doesn't these results tell you something?) Paul