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

To: Dennis V. who wrote (6756)	1/5/1999 11:45:00 AM
From: lws	Read Replies (1) \| Respond to of 27311

Hi, Dennis, Yes, I agree things seem to be shaping up for the "good success" scenario. It seems to me Valence has an excellent shot at becoming the dominant supplier despite the ongoing delays. The (inevitable) announcements of other suppliers all seem to indicate plans to produce at least a year from now, and seem to imply much smaller production capacities than Valence will presumably have by then. Moreover, such announcements of plans to produce a year or two in the future seem subject to the same delays Valence has already experienced. Of course, once they are up and running, they can all increase production capacity by replicating machinery just as Valence plans. The only other significant producer for now may be ULBI, which evidently claims to be ready to supply in volume upon receipt of an order. It is odd, though, that they haven't received any orders if they are in fact ready to produce. Perhaps this is due to the absence of a second source. That is, they may need Valence just as Valence may need them (or some other second source) to assure potential customers of competitive prices and reliable backup supplies. Given the ability of Valence and ULBI to produce now (or very soon), the other issue is one of demand. I am not clear about how fast the market will be able to absorb their combined production. The problem cuts in both directions. If the market emerges slowly enough to leave them with excess capacity, then prices will be soft, but other competitors will have less incentive to bring up production quickly. Conversely, if the market expands fast so they enjoy firm prices and maximum production, then other competitors will appear more quickly. How all this sorts itself out over the next few years is anyone's guess. Still, I think Valence will enjoy "good success," and will enjoy it sooner rather than later. Until then, however, I am still keeping everything crossed, burning incense, and holding my own children in reserve. My sister was quite angry about her's. Regards, lws