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

To: FMK who wrote (17934)	1/30/2000 10:57:00 PM
From: Zeev Hed	Read Replies (3) \| Respond to of 27311

Fred, I use the term "yield" in the same fashion it is used in the semiconductor industry, namely the number of acceptable batteries from the the potential number from the first laminate (equivalent to the number of good wafers or dies divided by wafer or die starts), I think that the nomenclature used by VLNC might relate to the number of good cells as a percentage to those cells getting to the test bench. This might be the source of the difference. Valence has not "gone down" the learning curve, IMHO, for the simple reason that they have not been manufacturing for any length of time on a full shift basis (their inventory would blow up if they did and as we know, did not ship), as I have said here before, any process that has 20 steps or more must have about 97% or so yield in each of the steps to get to 80% overall yield (from first laminate start), I know VLNC might be great, but without running on a production basis, it is doubtful, once more in my opinion and based on prior experience, that they will reach that yield in the first two quarters of full operations, I do not count on that and I doubt the market will count on that. I think the market would be happy to see them operating on a breakeven basis even at $75 MM ship rate. Since VLNC will be selling a lot into the portable PC market, a big chunk of which is captive at places like Toshiba and NEC, I am not sure that premium prices will be a great majority of the selling, they'll profit on efficiency and competitiveness of their product, but once the Japanese get back into production, ironing their own problems, I see the possibility of price competition as a strong possibility, if not an eventuality. I presume VLNC is ready for that (after all Shugart has been in similar situations and would advise them accordingly). I think we are going to find out what are the margins soon enough since VLNC is probably shipping some of these first orders received late last year. Zeev