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

To: MGV who wrote (4142)	9/10/1998 2:32:00 AM
From: kolo55	Read Replies (1) \| Respond to of 27311

Production workers and raw material costs are part of Cost of Goods Sold. Here are possible Annual Income Statements for Valence producing 3000 laptop batteries per day (1M per year) and at 6000 laptop batteries per day (2M per year). (numbers are in 1000 USD increments): Revenues $75,0000 $150,000 Cost of Goods Sold $37,500 75,000 SG&A $10,000 12,000 R&D 15,000 15,000 Operating Income 12,000 48,000 Interest Expense 3,000 3,000 Depreciation 7,000 7,000 Before-tax Profit 2,000 38,000 Taxes 1,300 2,500 After-tax Profit 700 35,500 The Cost of Goods Sold includes production labor and cost of materials, returns, etc. and is based on a gross margin of 50%. If half the CGS was labor, then the cost per worker for 120 workers is $150,000 per worker for the first case. I broke out Depreciation as a separate line item. This depreciation seems somewhat reasonable, but could be high. I don't know the useful life of the equipment. Also the prior capitalized R&D will have to be depreciated, and I haven't included an estimate for that. Taxes are estimated using the NI tax info in post #3244. I ignored tax loss carryforward for this exercise. Paul

To: MGV who wrote (4142)	9/10/1998 2:35:00 AM
From: Larry Brubaker	Read Replies (1) \| Respond to of 27311

Sure they are hiring, and sure raw materials costs will increase if and when they go into production. I was not trying to argue operating expenditures wouldn't go up. My argument is that capital expenditures are also likely to go down (at least until they order more lines than the ones that Lev reported are pretty much paid for). The reduction in capital expenditures should offset some of the increase in operating expenditures. As far as the price going down, I can't dispute that. I would also suggest the price isn't likely to fall much further. VLNC needs to maintain a $3 floor in order to proceed with the 2nd and 3rd closings. I would guess that the major backers of this company will step in to support the stock above $3, unless they have lost all hope of its success. The fact that Carl Berg ponied up another $2.5 million about a month ago suggests he hadn't given up as of that time.