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

To: P. Ramamoorthy who wrote (16200)	11/16/1999 7:33:00 AM
From: Jay Lowe	Read Replies (2) \| Respond to of 27311

>> How you accounting for the Alliant-VLNC JV income I'm not. The only work I've done has been demand-side estimating of Valence sales potential based on commonly available projections of laptop, cellphone, and PDA sales ... using my own projections about %LiPoly penetration of these markets and VLNC market share. My only intention was to attempt some cross-check of the supply-side numbers the company uses ... how much they can produce. The interesting intersection I noticed tonite is that the company's Y2000 supply goal (or 2001, depending on who you listen to, I don't care) is within a few percent of what I earlier estimated as reasonably projected demand. I don't have any numbers for Hanil, Alliant, licensing, new factories, or anything like that. Hanil might be subsumed in my projections simply by increasing the market share factor. I noticed some comments flying around earlier about margins ... 50% ... 15% ... whatever. It seemed that there was some apples and oranges being compared ... gross margin of sales (which might well be 50%) .vs. net margin on operations (which might well net out at 15%). I'm not confident of the gross margin assumptions I used in my projections ... we have darned little info on prices and margins ... and Lev skated the issue ... as well he might until production volumes stabilize and more experience is available about costs, yields, etc. I basically WAG's the cell price and margin ... the constraint I wanted is a reasonable estimate of per unit gross profit. Based on what I know (for whatever it's worth) about component prices ... I think that $3 gross profit on a small battery (just the cells actually) and $15 on a 4x4 ... I think these numbers fit the target device parts list well enough. Anyone have better data? I'm all ears. I am interested in the other revenue sources ... I just don't feel like I have any tangible data available to fuel objective analysis. The laptop, cell, and PDA pattern is pretty simple and there's not a lot of unexpected controversy about the numbers ... people might choose different ones, certainly ... but the industry patterns are pretty well known. I do think VLNC may run a pretty high gross profit on the cells, since they are a relatively simple but very unique item ... an one for which demand will lead supply. How much of that they can carry down is far less clear ... they face a lot of build-out costs.