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Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: Larry Brubaker who wrote (7581)	11/10/2000 12:18:54 PM
From: Mark Johnson	Respond to of 30051

Larry: How could there be any revenue from production on Li/Poly Batteries when nobody has perfected the technology...The intent of combining Bellcore and Valence portfolio is to facilitate the development and marketing of the technology.....Bellcore realizes their ability to receive revenues from their patents were hindered by the Valence portfolio.....Two are stronger than one....

To: Larry Brubaker who wrote (7581)	11/10/2000 12:23:40 PM
From: Mark Johnson	Respond to of 30051

<<Seemed to be quite surprising to the analysts listening.>> Short antagonists like yourself also listen to the conference calls and love to cast a negative spin...

To: Larry Brubaker who wrote (7581)	11/10/2000 12:28:57 PM
From: Mark Johnson	Respond to of 30051

Larry: Your THQI pick is down 6 points since made your buy at 24 7/8.....LOLLOLLOL..... Message 14449540

To: Larry Brubaker who wrote (7581)	11/11/2000 4:36:22 AM
From: Zeev Hed	Read Replies (3) \| Respond to of 30051

Larry, I finally had a chance to listen to the holy CC. Quite interesting, and sometime confusing. For instance, at some points, someone inferred that Telecordia, after the transaction still as an interest (like if it was a joint venture or something). As far as I can tell, it is a straight sale of all of Telecordia IP to holy for $45-$50 worth of holy stock. Lev suggested that the total market of rechargeable batteries is $8 Billion annually, but he also suggested that within "two three years" Li-Polymer will take $1 Billion of that. If that is the case, then $45 MM might be "cheap". I for one do not see how Li-polymer can capture that much of the market in two three years, capacity is not in place and can take more than two years to put in place. It seems that the holy still has, as I expected, major yield problems, that is probably one reason (and Lev admitted to that problem) that he cost of goods (margins) is so high. I was hoping that by this quarter we should be able to derive a 'model" of gross margins and profits, but that is tough with negative margins. One of the questions was about cash flow and cash burn (for good reasons, since cash on hand went from above $24 MM to just under $9 MM in the last quarter). The operational cash drain seems to be just above $6 MM per quarter (they had 2.7 MM in amortization, a little high since the total plant assets is under $30 MM, and thus depreciation rate is three years, quite fast for something that takes two years to put together). In the next quarter, the depreciation line will have to include something of the $45 MM just paid for the IP. Since I presume the IP has another 10 years life (the seminal patents are already ten years old), that will add another $1 MM to expenses (non cash of course)quarterly. My main worry is cash, they are supposedly going to get fast some $4 MM from IDB, but id they increase sales, they will need more working capital (right now they have $2 MM in receivable and $4 MM in inventories for $2 MM in sales, I presume that these ratios will go down, but if they get to let say $17.5 MM quarterly within a year (late by one year in reaching the "sales rate" of $70 MM annually), they will need to increase working capital by at least another $10 MM. Since it appears that they are not going to be profitable in the next two quarters and are going to burn at least $7.5 MM quarterly (possibly more, since they are going to build a licensing group), they will need to come up with more money. Lev implied that at current stock price he is not going to go for money (and he said he had many interested parties), but frankly, if we go into a bear market, he may run out before the stock price is where he wants it to be to issue more stock. I still consider the holy a "development stage company" and as such, quite risky. On the positive side, one day, the market may start and consider the licensing model (Lev was trying to push that model by paralleling the holy with QCOM, even mentioning QCOM capitalization (with envy?). Once they sign up few companies or revive moribund licensors of telecordia, it may be worth watching for a QCOM/RMBS type of stock behavior. maybe the market will start and discount that ahead of time. Interesting times for the holy one. Zeev