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

To: MGV who wrote (19439)	4/29/2000 2:52:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 27311

MGV, you are correct in assessing that high energy density rechargeable batteries are indeed an area of fundamental future growth, and indeed I have another long term investment in another company (which I bought when it was selling at book). VLNC is compelling and finding the right entry point might be very rewarding since they have bet everything on going full steam and capturing a major market share early. That is the plan, and that is what makes the situation compelling. A plan like that, however, has major risks in it (very similar to the dot.com trying to establish brands without paying attention to the bottom line and running out of cash), one can easily run out of money before getting into full production, and a second hidden risk, is that an "accident", if it were to occur, could be terminal. By an accident, I mean finding too late some hidden defects once there are millions of batteries in the field being abused by users. That is one reason that I prefer the "walk before you run" approach. Yet, there is a non zero probability that VLNC will succeed in its risky gambit, if they do, they may have a major share of a multi billion dollar market, which itself could grow annually at more than 20%. In weighing the risk between the "go it slow" and the "damn the torpedoes, full speed ahead" approaches, I use TA to indicate to me possible "hidden" fundamental developments which I will never be able to discern from the regular flow of news releases and SEC filing ahead of time. Thus keeping an eye for technical changes in VLNC and acting if such materialize (and it is not easy to differentiate between technical behavior which is market related and intrinsic technical weakness or strength), seems to me to be a very worthwhile endeavor. It was before, and I hope it will be again. What I perceive as being your major impediment in making money in VLNC is your stubborn insistence that you know the fundamental situation better than the market does. Thus you develop a "judgment" which currently is negative (and possibly rightly so, and surely so, based on pure financial measures), and will not change it until VLNC success is so self evident (like positive cash flow and nicely growing top line and bottom line), that the price will already reflect the potential continuation of such a success 10 years hence, by then however, that price will, IMHO, be fundamentally too high to make VLNC a "safe investment". If you indeed agree with the tenet that VLNC has the potential of participating in a major growing market segment, you should acquire some flexibility, and weigh some of the potential positives of the situation against all the well known negatives. Zeev