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Technology Stocks : Seagate Technology -- Ignore unavailable to you. Want to Upgrade?

To: DJBEINO who wrote (5294)	7/22/1998 2:35:00 PM
From: Robert Douglas	Read Replies (1) \| Respond to of 7841

Shugart reiterated that was surprised at being ousted. "I thought I was doing a really good job," he said. "You don't mind being fired if you really screwed up." A really good job? What about buying Conner at the top of the market? What about losing market share in high-end drives to IBM? What about a stock down from $56 to the low 20's? It would probably have been lower if not for the rising star of Seagate Software, which really was not Shugart's idea. I think Shugart has done an OK job, but a really good job. Sorry, no.

To: DJBEINO who wrote (5294)	7/22/1998 8:39:00 PM
From: FMK	Respond to of 7841

The news on Al Shugart has reached shareholders of another of his companies. For those who may be interested, this company, Valence Technology (VLNC), appears likely first with automated production of Lithium Ion polymer batteries considered the "next step up" from rechargeable Lithium Ion for millions of portable devices. I am a shareholder and have followed the company through some setbacks, but have become very enthusiastic lately because major news appears close as they complete the transition from R&D to high-volume production expected in September. Laptop manufacturers now offer Lithium-ion batteries in high-end models because they store about twice the energy as Nickel metal hydride. Currently, these batteries are configured as series-parallel combinations of liquid-electrolyte canisters enclosed in battery packs. According to a study by Compaq, about 25% more energy storage can be gained by more efficiently filling a space with active material, at about 60% of the weight because solid-polymer cells are rectangular (prismatic) in shape and do not require a metal can for the electrolyte. VLNC's first production line (low speed, multiproduct new design) has been producing laptop batteries (likely 4"x4" footprint) being inventoried and held for testing. Their 2nd and 3rd lines(high speed), are capable of higher production rates, one of which is also being ramped up in Northern Ireland. 3 additional assembly lines are on order for October delivery with and expected $10 -30 million combination debt/convertible financing being arranged with minimum dilution of the existing 24 mln outstanding shares. The Ireland plant has room for 10 assembly lines. I understand that at least 12 potential customers have been paying for production samples for about 2 1/2 months of a version that was reported to exceed customer specs. Samples of an improved version believed capable of storing over 20% additional energy at higher temperatures have been out for two or three weeks. Since 500 recharge cycles are involved, testing programs require an estimated minimum of 30 days. The company has joint ventures in place that required zero cash outlay but pay Valence 50% of the profits as compensation for years of R&D. Joint venture partners include defense contractor Alliant Technology and South Korea's Hanil Telecom. My calculations indicate that the first and slowest assembly line, now in operation in NI, should easily be able to earn a profit all by itself by turning out the company's stated design capacity of 1.2 million laptop batteries per year(for their thinnest 4mm version) that their customers will likely pay about $70 each for. (1.2 x $70 = $84 million in revenue). If they sold them at a low price of $60 and made a million of them, revenue should total $60 million. A low 40% profit should then contribute $24 million toward a "burn rate" of $5 million/quarter before even taking into consideration the approximately $37 million rebate that should begin flowing from the Irish Government. From the 10k, stockholders equity dropped about $13 million last year with income only from General Motors, roughly indicating a burn rate of just over $4 mln per quarter. My calculations for line 1 and related assumptions can be found at: Message 5243575 It should be reasonable to assume that the joint-venture partners worked similar numbers before putting up 100% of the capital and agreeing to split profits 50/50. At half Valence's expected % profit, they still must still have considered it a worthwhile. This implies that shareholders should anticipate twice the joint-venture partner's expected rate of return on batteries Valence produces independently of the joint ventures. Remember that these computations represent revenue for only the first and slowest of the assembly lines in Northern Ireland. Other lines are expected to turn out higher volumes but products such as cellphone batteries will be somewhat less profitable. It appears Al should now have more time available to witness fruition of another of his endeavors, of which he has been a director since 1992! Also with a stake in the outcome are Bell Labs(Bellcore)who took a 1.5 mln share position as part of a licensing agreement in 1995. Fred M. Kellett