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

To: Dennis V. who wrote (22201)	11/10/2000 3:11:43 PM
From: Tickertype	Read Replies (1) \| Respond to of 27311

Thanks Dennis, I think I may have looked at the "german machine" as a smaller part of the total than it really is. I thought of it as the machine into which the completed laminate is fed and cookie cut into cells, with the degas/reseal/conditioning equipment handling the back end processing. But the german machines apparently consists of everything from the laminate entry point on back. Sadly, the system has slipped 6 months, but I am encouraged by Lev's comment that the FABAL machine is able to handle much of their larger battery requirements right now, with just 4 hrs required to reconfigure. This should allow him to make those PDA batteries he apparently expects to soon get an order for, based on his comments. - T -

To: Dennis V. who wrote (22201)	11/10/2000 4:39:17 PM
From: Rich Wolf	Respond to of 27311

Hi Dennis, ticker: First to recap, I believe the 'front-end/back-end' distinction is made as follows: the front-end is the chemical mixing, manufacture of film (using the so-called 'coating' machines, recall the small-scale 50-ft-long machine in Henderson that many saw during the last meeting), as well as the grid coating process. The back-end is the lamination of the layers of films and grids into one 'bicell' sandwich (still in long, uncut strips); followed by the assembly process where ticker hears his favorite 'ka-chunk' as it makes bi-cell 'cookies,' then the attachment of electrodes to each bi-cell, then the stacking of the bicells (all this being done in the 'assembly' step), a final heating/lamination (not sure if much pressure involved here), then extraction, packaging, addition of electrolyte, vacuum sealing, activation and conditioning, degas/reseal, and quarantining. The output of the front-end is the set of films and grids that Valence would offer to sell to people (such as an independent Hanil) who would then perform the back end themselves. Previously they had told us they expect the German assembly machine in Feb/Mar, now it has slid to summer; also the associated high-speed packaging equipment (72 cells/min) that would be required by this assembly equipment (for the large cells, I think) delayed until March. Lev also alluded to another piece of packaging equipment due to arrive in a month, not sure what format of cell. Hope this review helps. =========================== Regarding the call: I think the questioners were distracted by Lev's focus on the licensing paradigm, and his deemphasis of manufacture, and lack of promise of revenue ramp (esp with Hanil no longer adding to Valence's bottom line in as significant a manner as they would as a JV; though it will put pressure on them to get their own act together)... then factor in the fact that Valence did not really purchase an ongoing revenue stream from current Bellcore licensees... and you could hear the disappointment from the analysts. But also believe that Valence needed to put the fundamental bellcore patents together with their material patents and process patents, as a complete package, for them to make any headway with licensing. We probably don't hear about done deals until after the bellcore deal closes. I would also examine the filing to see how many shares SAIC holds, to see if they unloaded all their shares last time at 30/sh or so, after the lawsuit shares were issued, which left SAIC as a below-5% holder (and therefore free to sell w/o filing). This time around, they start as 8% holders or so, hence would have to file if they chose to sell some of their new shares right away. We also will be looking for wording regarding any lockup of said shares. I also think that Valence will indeed be doing high-volume output on the German machine, that's what it's made for. But we won't see that capability until some months after they receive it next summer. Hence his deemphasis on volume manufacture. However, near-term he will indeed be delivering to the Alcatel order, and this will be the ongoing revenue stream that the analysts want to hear about. I believe this will commence soon, and was held up pending the arrival and installation of the last set of high-speed packaging equipment (though Lev didn't want to say that on the last cc, the analysis of what was under the roof in NI told me this was the high-probability scenario, hence don't give up on that monitoring, Robert C.). It would have assuaged many of the questioners if Lev had been able to say he would be delivering to this customer soon, since, like it or not, the only other ongoing production effort is to a customer (G*) whose business model is under a cloud of doubt. Conversely, the Alcatel order opens the door to a wide set of possibilities, esp when you consider that they sell 5M phones/quarter, and are guiding towards 3/4 of those phones being WAP-enabled within a few years. (So why so quiet Lev? I think you just had another song running through your head today, eh?) The story continues.