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

To: I. N. Vester who wrote (4835)	11/11/1998 2:09:00 PM
From: Greg Smith	Read Replies (1) \| Respond to of 27311

OK, thanks. But it still seems like 3.75/minute (1800/day) is a very low production rate. The 4x4 cell is 3.8V x 3000 mAh = 11.4 Wh. 11.4 Wh x $2.50/Wh = 28.50/cell. 28.50/cell x 1800 pcs/day = $51,300/day, or a gross of $12,825,000 per year (assuming normal 250 days of production). At 35% gross margin (pretty optimistic for first year), that's about $4.5 million GP/year. Is that enough to cover operating expenses? The 1Q financials say operating expenses are still about $4 million per quarter. Maybe they're counting on 2 shifts per day, so the annual GP could go up to $9 million/year. But they would still need to cut R&D dramatically to get operating expenses down to make that a break even point. Am I missing something (I hope)? It looks to me like overhead needs to be absorbed by more than one line to achieve profitability.