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

To: Herb Blair who wrote (16379)	11/24/1999 9:14:00 AM
From: John Curtis	Read Replies (1) \| Respond to of 27311

Herb, et.al.: LOL! Well, since we know URL's vanish I'm taking one out of the Yahoo threadsters page, wherein he/she posted the article in full. This way we'll have a "record" of it here: ------- wallstreetcity.com ------- Valence Technology: The Qualcomm of Batteries? by Chris Connor Level of Operations: Until just recently, Valence Technology {VNLC} was a development stage company. Its prototype batteries had not met market specifications until it announced its first purchase order from Moltech Power Systems (formerly Energizer Power Systems) for $2 million on November 11. This order came in response to a commitment from an undisclosed major satellite and cellular phone customer. There has been much speculation on the identity of this customer, but it is just speculation, so no names will be mentioned here. Before this order, Valence had generated essentially all of its revenues from a research and development contract with Delphi Automotive {DPH}. Delphi wants batteries to make hybrid electric vehicles. Now that the company has achieved commercial status, it plans to provide prototype batteries to a few potential original equipment manufacturers (OEMs). If these OEMs deem the battery technology superior, and in accordance with their specifications, Valence expects them to incorporate this technology into future battery offerings. The company holds hundreds of patents on technology that could prove itself very useful in the new era of distributed devices. Valence's proprietary battery technology could catapult it to a place of leadership in the new economy. Battery Type Focus and Corresponding Applications: Valence's research and development efforts focus on producing advanced rechargeable batteries based on lithium ion and lithium polymer technologies. Lithium Polymer is a lower cost version of Lithium Ion. This lower cost is important because price is the biggest disadvantage of lithium batteries. In June 1995, Valence licensed Bellcore's plastic lithium battery technology so Valence could integrate that technology with its own pre-existing lithium polymer technology and improve the quality of its product suite. Valence's Lithium Ion Polymer batteries have the advantages of being small, lightweight, safe, and leak resistant. As mentioned in the initial report of this series, Lithium will likely be the preferred energy source for the explosive wireless industry. Moreover, Valence's batteries use manganese instead of cobalt as cell material. This difference is crucial because cobalt cells are very volatile - the larger cobalt cells are especially at risk of explosion. In fact, Sony {SNE} has withdrawn its cobalt efforts for this reason. On the other hand, manganese cells don't explode. Since manganese cells don't explode there are fewer safety precautions that need to be taken - which means lower overall battery costs. In addition, the material itself is cheaper than cobalt. Every other lithium battery maker uses cobalt instead of manganese. Apparently, Valence is the only battery company that has learned how to exploit manganese oxide for commercial battery purposes. This capability is a key component of the company's intellectual property. Most of Valence's production capacity will likely come from its joint venture with Hanil of Korea - from which Valence will receive 50 percent of the profits. On November 1, Hanil Valence announced that it was the first company in the world to start commercial production of lithium ion polymer batteries. These batteries are considered to be the next generation of storage batteries for mobile phones, laptop computers, handheld computers like Palm Pilots, and camcorders. Several battery makers in Japan are already making sample products from the batteries that have been produced so far. Looking forward, the joint venture expects to produce one million lithium ion polymer batteries per month. In the second half of the year 2000, Hanil Valence plans to start producing larger capacity lithium ion polymer batteries with a target of six million units a month by 2005. Investment Summary: Valence shows the most potential of the young battery companies because of its focus on the kinds of batteries that currently seem most promising. Its extensive patents, its joint venture partners, and its substantial early purchase order add to Valence's viability. VNLC's use of manganese over cobalt also deserves consideration. When production is at full pace, Valence could develop into a powerhouse in the battery industry. In a couple of ways, Valence is similar to Qualcomm {QCOM}: both focus on a technology that will improve the use of wireless technology and both have proprietary technology that other companies will need in the future. Calling Valence the Qualcomm of batteries may be premature at this point, but it could be an accurate statement over the next five years ------ By the way, I find the mention of 3Com's PalmPilot interesting, as the most recent edition of ComputerWeek had an article on how the Palm is blowing the doors off MicroSofts attempt in that market sector. This ain't surprising if you know anything about MSFT's CE software. Anyway, let's see if this article has any effect on this pre-holiday(but BOY was the subway commuter traffic light on the way in this morning, heh) trading day. John~