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

To: FMK who wrote (6117)	12/19/1998 4:11:00 PM
From: MGV	Respond to of 27311

Contrition without correction: Our reward for getting in early and suffering some delays is the difference of seeing our stock run from $5 or $7.50 to $75 compared to starting at $15 to $75 for the more cautious investors. The end result is that we will own over twice as many shares for the same dollar investment. The issue is visibility. Visibility regarding fundamental issues including financing, technology, and the biggest one of all, execution. Execution regarding manufacturing, marketing, and distribution. VLNC is an easy example. There is certainly broad consensus if not outright unanimity about the sparseness of company-source data coming from VLNC to allow shareholders to track progress reliably. Consequently, many shareholders look to other, less reliable, sources for information. There is ample evidence to suggest that the information provided by non-company sources has been unreliable. But the technology is attractive. Who hasn't wished for batteries that offer more capacity than ones available on the market. Clearly, the economic need for increasingly powerful and smaller scale batteries is growing. So what should you do? Forget the siren call. Lash yourself to the mast if you must. Wait for visibility. If you follow the company's progress and buy it at $15 when you have the visiblity you have a much better deployment of capital than at $7.5 w/o visibility. Instead of paying $7.5 w/o visibility in VLNC, invest the money in a company with good visibility. Had you done that in any one of a number of companies in the last 24 months you might easily have accumulated 2x or more your original amount by the time VLNC ever provides enough visibility to offer a reasonably good investment. On a relative scale, paying $15 or even $20 for VLNC might easily be equivalent to buying it at the $5 - 7.5 you paid for it w/o visibility. The big difference is the risk involved. You don't depend on information sources that are not accountable for their rosy projections and thinly veiled references to "special" (suspect) information. The advantages are many. In a competitive landscape you havent hitched your wagon to a company until it provides requisite visibility. If one never does, you haven't suffered a tremendous opportunity cost as you wait for it to fail or succeed. And the bottom line is, it is a fallacy to suggest that you will lose upside by not committing early.

To: FMK who wrote (6117)	12/19/1998 4:15:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 27311

Fred, I am not sure about the absolute "removal" of the death spiral floorless: The last news release states: "The terms of the preferred stock to be issued in the second half of the financing are similar to the terms negotiated with Castle Creek for the first half of the financing, with minor technical amendments, including that the variable conversion price for the second half of the financing will not be applicable until the end of July, 1999. In addition to the issuance of the second $7.5 million of preferred stock, Valence will also issue to the investor a warrant to purchase the same number of shares of its common stock at the same exercise price as it would have had the second portion of the preferred stock financing been completed as previously contemplated." I read this to say that in lieu of the minuscule warrants (about 400,000 shares?) now the warrant itself has the same floorless properties as the preferred and it is expanded to cover the same number of shares as the preferred. If Larry is right, and the company is in production by July 1999 and nothing strange happens, you may be fine. But, if they need more money, or they have problems getting some big names on board, or UBLI pulls a big winner (which will have negative impact on the stock) or we simply go into a bear market and the price of the stock is halved (which will still be a good 5 to 10 times book), you will have a possible repeat of Hayes. Not only will a death spiral evolve, but additional cash required to support working capital of growing sales will not be available. I am not saying this will happen, but the danger is certainly there. Mind you, at the $100.share you are citing, VLNC would be capitalized at $3 Billions, and I do not see that happening (unless they add .com to their name <VBG>) anytime soon. Zeev