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

To: Larry Brubaker who wrote (6093)	12/18/1998 10:58:00 PM
From: FMK	Read Replies (2) \| Respond to of 27311

20% of 15 mln laptops amounts to 3 mln per year which approximates the annual capacity of Valence's line 1. This is about 2.3 mln more than required to break even. $2.3 mln x $75 x 33% profit/30mln shares equals about $1.91 per share. If we take half of this to approximate ramp up, the result is 95 cents per share for the first production line alone. You shouldn't have sold out!

To: Larry Brubaker who wrote (6093)	12/18/1998 11:57:00 PM
From: Jay Lowe	Respond to of 27311

Larry, 30M shares ... got it ... I'll ramp the shares a bit, too. 20% share ... I think that works ... remember, that's only 20% of the total penetration of LiPoly into each segment ... for example, what I'm saying in 1999 is that 5% of laptops shipped will go with LiPoly (750,000) of which 20% will be VLNC-supplied. VLNC revenue is 5% * 20% * units * margin * price. What's you take on the 20%? Do you think VLNC will not be 1 of at most 5 vendors dividing the market in 99? Do you see others with more capacity or better relationships? I think 20% makes sense because: - VLNC is shooting to produce in 1999 ... most of the others are 12 months later or more. I see VLNC with 2-3 possible competitors in 99 ... ULBI and TDI (?). - If VLNC can't hold a 20% share in 99, then they sink in the long-term, I think, as the big boys come online in Asia. - If VLNC can hold share early, they stand a good chance to keep a significant share, I think, since fewer competitors would enter. - VLNC has the largest estimated capacity, and is likely to ship a lot of cells (if they ship any cells at all). Counter-argument here is that others may ramp faster (Sony?) in order to establish share, but those competitors I see most able to ramp fast (again, Sony) have the least incentive to rush, since they have captive channels anyway. - I think it is more likely that VLNC starts with a large share in 99 (relatively few cells too) and gradually loses share over time ... down to maybe 8-10% ... that would be governed strictly by production economics I would guess, yes? I like the idea of collaborating on a model ... we all get to plug in our favorite numbers ... and it might tend to clarify some of the discussion about assumptions ... common language, eh?