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

To: Zeev Hed who wrote (6320)	12/27/1998 3:35:00 PM
From: FMK	Read Replies (2) \| Respond to of 27311

Zeev, the $1.65 per watt hour was my own assumption based on a $2 per watt hour figure that had prevailed in 1997 for liquid lithium ion. I was allowing for competitive price pressure. I would suggest the $2.50 per watt hour is based on the Valence's higher performance version for which supply is scarce in high volume. As far as being profitable, Valence stated during a recent conference call that they budgeted for 30% yield of their earlier, lower performance batteries and concluded that their efforts would be worthwhile with yields above that. There is also a consensus that the liquid electrolyte canister manufacturers like Sony get only 50% yield. I believe Valence is now getting about 80% yield. To help keep this in perspective, joint venture partner Hanil Telecom in South Korea agreed to put up all the capital and then share profits 50/50 with Valence. They agreed to do this at the outset and continued to proceed with the Venture. Hanil has announced that they will be producing 1 mln cellphone batteries per month starting early next year. You can check their news release for a timetable. If Hanil's profit expectations are good enough to be able to give half of the profits away, profits for Valence's own production must be twice that. That means, for example, that if Hanil ends up with a 25% profit margin, Valence's margin must be 50% because they don't have to give away half.