Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: mooter775 who wrote (16935)	12/11/1999 9:05:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 27311

Mooter, the current annual burn rate is $35 MM, and that is without actual production, how can $40 MM annual sales be break even? That would mean gross margins of 87.5%. This is impractical even at 100% yield, gosh, just depreciation should be of the order of $5 MM plus yearly. Since the equipment was not in production so far, depreciation charges on the capital expenditure (about $30 MM plus) are not taken yet. Furthermore, on a cash flow basis, you need to bring to the bottom line at least 30% of sales just to support increased inventories and receivable. Thus even if $40 MM annually is break even, you still need another $15 MM or so just to support growth in working capital. I am not even talking about capital expenditures required to raise production levels to meet what is expected to be vibrant demand. It does not make much sense to set up expectation that are too optimistic, it is not even necessary to support the price, since the market accepts a good 12 to 18 months from start of shipments to break even point and even longer to positive cash flow. Zeev

To: mooter775 who wrote (16935)	12/12/1999 12:23:00 PM
From: Larry Brubaker	Read Replies (2) \| Respond to of 27311

<<Company in August conference call postulated cash flow breakeven in 12/99 quarter. Delays in initial purchase order have pushed that back, in my opinion, to 3/31/00 quarter, and 6/30/00 at the latest.>> By the way, I thought I'd remind you that last summer, the projection attributed to VLNC management was... "VLNC will break even in the 3rd quarter from Hanil and Alliant orders alone." This projection was not conditioned on an initial purchase order, but simply on the existing orders from Hanil and Alliant. Remember the statement that "next month's production is spoken for." This also referenced the Hanil and Alliant orders, which were claimed to be sufficient to achieve cash flow breakeven. Just thought I'd remind you that the projection of breakeven cash flow was not conditioned upon further purchase orders, but simply the orders they already had.