Press Release
SOURCE: Valence Technology, Inc.
Valence Technology Unveils New Business
Strategy to Drive Next Stage of Growth
Company Introduces Next Generation Chemistry, Implements
Licensing and System Sales Approach, Focuses on Broader
Applications of its Technology to Access Significant Energy
Solutions Market Opportunity
AUSTIN, Texas--(BUSINESS WIRE)--Aug. 23, 2001-- Valence Technology, Inc.
(Nasdaq:VLNC - news), a leader in the development and commercialization of
lithium-ion polymer rechargeable batteries, today announced details of its new
business strategy that is designed to transition the business from a research and
development oriented company to an operational company with a stronger sales
and marketing focus.
The company's strategy includes the introduction of its ``next generation''
phosphate technology; a balanced licensing and system sales approach; a
manufacturing plan that leverages internal capabilities as well as OEM
relationships; and performance guidance and milestones reflective of this
transition.
Stephan B. Godevais, Valence's president and chief executive officer, said,
``Today represents a significant milestone for Valence and a major turning point
for the battery industry overall. With our new business strategy complete, we now
have a superior technology in hand, a significantly broadened market opportunity
ahead of us, and defined steps to capture that opportunity.''
The Phosphate Advantage
Phosphates represent a superior solution relative to today's rechargeable
batteries, because they offer great cost/performance attributes with better safety
and environmental characteristics. Valence expects to leverage phosphates by
capitalizing on the energy density and efficiency of Lithium Ion, and offering an
alternative that addresses the weaknesses inherent to the cobalt chemistry around costs, safety and
environmental issues.
``We believe that phosphates will become a major play in today's markets, providing a clear, differentiated
alternative to existing technologies. Further, the combination of phosphates with our existing polymer
technology presents a highly competitive solution for a wide variety of applications, which allows for the creation
of new markets that current technologies do not serve adequately,'' concluded Godevais.
Valence plans to introduce its new phosphate based technology by early next year, addressing the existing
consumer, computer and communications markets sized at $13 billion. The company also intends to address
new markets with its technology, including the vehicular and industrial segments, estimated to approach $40
billion.
Capturing the Opportunity
Valence's growth objective is to facilitate the adoption of its technology across industries through widespread
licensing, while, at the same time, leveraging its core system capabilities in selected target markets where the
company believes it can extend its technology better than anyone else. Valence has established a strategy that
focuses on both technology licensing and system sales. Licensing provides a ``first-to-market'' advantage to
licensees in all the segments not targeted by Valence. This ``field of use'' licensing strategy will maximize the
widespread adoption of the company's technology while allowing Valence to start developing a presence in a
few existing and emerging markets. System sales will focus on new, emerging market segments where
Valence will be able to leverage its deep domain knowledge and core competencies by designing batteries
that truly differentiate customers' end products.
Godevais commented, ``While this strategy makes the most sense from a market perspective, it is also the
most compelling from a profitability standpoint. It enables us to focus on select, high margin segments with our
system sales while facilitating the adoption of our technology across the rest of the industry through a highly
profitable licensing strategy.''
From a manufacturing perspective, the company's strategy will involve its own manufacturing capabilities as
well as OEM relationships. Valence will continue to manufacture products in its Northern Ireland facilities for the
highest value added part of its business. The company will complement these production capabilities with OEM
partners that will be primarily Asia based for the mass production part of its business. Additionally, Valence
intends to supply the materials production worldwide, which will provide an additional source of revenue going
forward.
Phased Approach and Progress Milestones
Valence segments the execution of its business strategy into a phased approach: technology, product and
customer. The following are key milestones to measure Valence's success in implementing its business
strategy over the next twelve months:
During the technology phase, Valence's primary objectives are to evangelize their technology opportunity,
complete management team additions, sign the first phosphate licensee and win a major system design. The
company expects to achieve these goals by January 2002.
During the product phase, which will last until early summer 2002, Valence expects to sign additional phosphate
licensees, obtain additional system design wins, launch several phosphate products, achieve phosphate
production milestones, and begin the manufacturing ramp-up of phosphate products through its Northern Ireland
plant and OEM partners.
The customer phase will be ongoing and identifiable by the launch of customer products that use Valence's
battery technology.
Financial Performance Outlook
Valence expects to operate from a lower revenue base in the second and third quarters of fiscal 2002, with
growth returning in the fourth quarter of fiscal 2002 as its strategy takes hold. As a result, Valence expects to
report revenue of approximately $500,000 in the second quarter, $1.0 million to $2.0 million in the third quarter,
and $3.0 million to $5.0 million in the fourth quarter. Fiscal year 2002 revenue is expected to range between
$8.0 million to $10.0 million. Despite modest revenue expectations, Valence does not expect any degradation
to the bottom line with expected earnings per share loss to be in the range of $0.20 to $0.25 in each quarter for
the remainder of fiscal 2002. This is due to the continuing benefits of operational efficiencies and an operating
expense base of $8 million to $10 million for the remainder of fiscal year 2002.
The company expects that it will experience significant revenue growth in fiscal 2003 and a dramatic
improvement in its overall profitability. If Valence is successful in achieving the milestones cited earlier, the
company expects to achieve revenues in excess of $50 million and to approach breakeven by the end of fiscal
year 2003.
Godevais concluded, ``Given the strength of our technology, the market opportunity that it creates, a strategy
that fully leverages our core competencies and a management team who can execute to this plan, we are well
positioned for significant growth and great success.''
Valence also noted that it received a $20 million funding commitment and has filed a shelf registration to secure
another $30 million, which should provide sufficient funds to execute its strategy well into next year.
Conference Call
Valence will hold an investor conference call today at 5:00 p.m. EDT (2:00 p.m. PDT) to discuss the details of
its business strategy and first quarter results, as well as provide guidance on the company's future financial
performance. The broadcast will include a slide presentation hosted on the company's Investor Relations Web
site located at www.valence.com. Participants should allow approximately fifteen minutes prior to the call's start
time to visit the site and download any streaming media software needed to listen to and view the Internet
broadcast. An online archive of the broadcast will be available approximately four hours following the live call
and will be available for approximately 30 days.
About Valence Technology
Valence is a leader in the development and commercialization of lithium-ion polymer rechargeable batteries.
Valence has more than 790 issued and pending patents worldwide, including 284 issued in the U.S. Valence
operates facilities in Austin, Texas, Henderson, Nevada and Mallusk, Northern Ireland. Valence is traded on the
Nasdaq National Market under the symbol VLNC. Valence can be found on the Internet at
valence.com.
Forward-Looking Statements
The information contained in this news release includes forward-looking statements that involve risks and
uncertainties. Such statements appear in a number of places in this presentation and include statements
regarding our intent, belief or current expectations with respect to, among other things, our revenues and
operating results in future periods, the market opportunity represented by our new phosphate batteries, our
ability to license our technology and sell our battery products and systems and the opportunities represented by
our business strategy and our ability to successfully execute on that strategy. We caution you not to place undue
reliance on such forward-looking statements. Such forward-looking statements are not guarantees of our future
performance and involve risks and uncertainties. Our actual results may differ materially from those projected in
this presentation, for the reasons, among others, discussed in our filings with the Securities and Exchange
Commission. The information in this presentation concerning our forecast for future periods represents our
outlook only as of today's date (August 23, 2001) and we undertake no obligation to update or revise any
forward-looking statement, whether as a result of new developments or otherwise. |
