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

To: jcox who wrote (4284)	9/28/1998 8:57:00 PM
From: I. N. Vester	Respond to of 27311

John, the dangers of variable-rate conversion of preferred shares are well known. I would be the first to admit that there is a wild card in the deck, and short-term it might well have a negative effect on the stock price until an order is announced. Still, the way i look at it, the firm which put up $7.5M for the preferred can't be counting on NOT seeing PO before Jan 27, 1999. I think they accepted a very large chance that PO will occur and they will convert at the fixed rate of $6/share. As a corollary of that, they must believe that they can make a very nice profit buying at $6. I find the converse logic - they believe PO's will not come so they count on buy a larger pct of the company by converting at a cheaper price, impossible to accept. If they don't expect success they would not buy at any price, unless the company had lots of liquid assets which it does not. If they don't expect success they would not have bought in. It would be a heck of a gamble on their part if they did not see a good deal at a $6 conversion. I don't think Lev and Carl are gamblers either. It's harder for us shareholders who don't have any transparency on the actual business situation. If you are the nervous type, it might be a good time to sell now. You might end up getting a lot more nervous if you have to wait some more weeks. I heard a rumour that we might have to wait until the Comdex show for a laptop announcement. I believe that is not until mid-November. It will be very interesting to see how well the price holds up in the meanwhile if that turns out to be the case....

To: jcox who wrote (4284)	9/28/1998 11:09:00 PM
From: FMK	Respond to of 27311

Jcox, I also heard of the WSJ article and comments about the convertible preferred. If you remember, this subject has been beaten to death for the last few months on the threads. You may also remember Lev's and a caller's comments that terms of the financing were very favorable to the shareholders. As you know, not all contracts are the same, and agreements with convertible preferred may have worked out badly for certain companies, just as banks have foreclosed on certain farmers whose crops had a bad year. You should remind yourself that line 1 is past the capability of making a profit for the entire company. If that alone is not enough, remember the batteries meet or exceed customer specs, over 20 potential customers have been paying for samples for many months and as of August 12, Valence has been discussing delivery schedules, prices, terms and conditions with potential customers. Try not to think about GM Delphi possibilities or you may feel under-invested. I can tell its hard not to find something to worry about. A well-informed large shareholder told me a few days ago that he feels chances of failure are less than 0.1%. I reminded him that with my own conservative tendencies, I am sticking with 0.2% for now. Hang in there! Regards, FMK