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

To: I. N. Vester who wrote (16248)	11/17/1999 11:06:00 PM
From: Larry Brubaker	Read Replies (4) \| Respond to of 27311

<<How much revenue did he have from Hanil in the .15?>> Believe it was $0. <<Remember, when he did that analysis he was 18 months or so early on vlnc start of production>> Actually closer to 24 months, assuming VLNC does start selling product in the first quarter of next year. <<and hanil was probably still looking for land to build the factory at that time>> Well if they were still looking for land in late 1997, they got that land and factory built quickly given that they first announced they were going into production in the summer of 1998. For some reason, IN, you are having heartburn over the (admittedly simplistic) projection I did. Let's review my assumptions. I assumed revenue of $250 million in 2001. Which seems quite optimistic to me given that Lev said they won't even have the equipment to do a $250 million run rate until sometime in 2001. He said they would not even have the equipment to do a $80 million run rate until late 2000. Yet I assumed that not only would the equipment be installed and running on January 1 of 2001 to do $250 million, but that they would sell the entire $250 million in 2001. Hardly seems like a pessimistic assumption to me. I assumed that 15% of that $250 million would flow to the bottom line as profits. Which is 3X the industry average profit margin, and higher than Red Chip's assumption for operating margin (which would be greater than net profit). Hardly seems like a pessimistic assumption to me. I assumed there would be 42 million shares outstanding. Which would represent an increase of about 5 million from the current 37 million fully-diluted shares. The additional 5 million shares to cover the remaining Daddy Warbucks financing, the remainder of the shelf (and then some) Lev said they needed, and the additional investment Lev said they would need to make to get to the $250 million run rate. This number could possibly turn out to be too pessimistic, but it could also turn out to be wildly optimistic. Over the last 18 months, they have raised about $30 million at an average price of about $5 per share. At that average, $5 per share would get them about $25 million, which is probably less than what they need to get them through to a $250 million run rate. So I don't think I'm being overly pessimistic here either. So, personally, I don't think I'm being awfully pessimistic here IN. But since you don't like my numbers, why don't you put up some of your own? After all, you should be able to do a much better job based on your conversations with management.