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

To: DKR who wrote (3033)	5/26/1998 5:19:00 PM
From: kolo55	Read Replies (2) \| Respond to of 27311

Lets break that $8B down a bit. First, How is this market segmented? Probably the majority of this market is cellphone batteries, followed by other portable electronic devices like videocams etc, with perhaps only 10-15% or so laptops. Does this estimate include high power drain devices like portable drills? I don't believe so, since apparently Li-poly isn't the best choice for those kind of devices (from my understanding). I assuming Lev is using a market number analagous to the unpackaged cell market Valence is selling to. So at 10-15% of the market, then maybe $800M to $1200M is the size of the laptop battery market. I suspect that at least half the market is replacement batteries, or add-on batteries. So I get maybe $400-600M as the market for OEM laptop batteries. This is roughly consistent with 10M units per year at $40-60 per unit. My point is simply that it will take time to penetrate the OEM laptop market, and build the replacement battery volumes from scratch (no existing Li-poly laptops out there now). So we shouldn't get carried away on our ramping projections. I believe a 25-50% penetration into the laptop market is prudent for 1999, and may even be optimistic for the near term. In this case, a $100M to $200M annual revenue range is a reasonable estimate, and trying to push the estimate above that seems to assume that the whole market switches very rapidly. Fred's estimates don't take into account the market assimulation rate. He assumed that production ability alone will limit sales. This doesn't quite jive with what Lev told us in the conference call, where he said "marketing" is the critical path to ramp-up. We need to start talking about "markets" then, and my post is heading us in that direction. As for Prausanna's post about Dell's move from 4 to 90 (split adjusted), well even Dell took almost four years for that move, and to imply that we have managed to pick one more stock (out of 12,000) that will duplicate Dell's incredible move, and hit Dell's high PE ratio etc. ... well, she's certainly optimistic. But before we see that happen, we'll need to see Valence dominate the laptop market, raise significant expansion capital without significant dilution, and transition into the cellphone market sucessfully. Thats a lot to expect, but I must say she is wildly enthusiastic. I'll be pleased to get a move to 20 by the end of 99 (for a 300+% gain in 18 months), and hope there is still a bright future at that point. Paul