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

To: kolo55 who wrote (3242)	7/1/1998 11:17:00 PM
From: FMK	Read Replies (1) \| Respond to of 27311

Thanks Paul, I have the following comments 1-The NI tax is based on 8% of the cost to produce multiplied times a general tax rate of 33%. This amounts to about 2.6666% of the cost to produce so it is nil. Your overall tax estimate is therefore quite high. 2-I also believe you are light on the laptop market size for Valence - they should be able to sell 4.5 million the first year, especially if you count spare batteries and add the replacement market for LiIon. 3-The cost of financing shouldn't amount to much more than interest because an offering is not in the picture as I see it. They should need to raise capital to pay for more assembly lines they are putting on order, but this will likely be 90% debt financing and perhaps 10% convertible options that would not be exercised at today's price. I believe it would be perhaps $12 or $18 several months in the future so raising $10-$20 million this way would not have much dilutive effect. The gist is, financing is not a problem, just obtaining it at the least cost. 4-You mentioned $15 million per year additional operating costs but you didn't take the $37 million from the Irish government into consideration. 5- Neither of us considered Joint Venture income. 6-Neither of us considered production beyond the first two assembly lines. 7-If you adjust your calculations for the above, perhaps you will come back with $2.80 per share earnings and a $50 share price! 8-Remember Don W was thought to be more than a tad optimistic when the dow was 3000 and he predicted 9000! Thanks again for your thoughts and as I read somewhere, BUCKLE UP! Best Regards, FMK