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

To: I. N. Vester who wrote (6876)	1/7/1999 10:23:00 PM
From: Gordon Quickstad	Read Replies (2) \| Respond to of 27311

I think that VLNC is probably going to be OK, but it doesn't appear that they're courting a "big contract", currently. If they had the very high quality interest that we hope they have, the company would be acting differently. They wouldn't have let out the sloppy SEC filings, and the Web Site would be updated and very spiffy instead of looking like the back seat of an abandoned car. The company would be "talking" to their shareholders and not letting out that the headquarters is for sale and then not giving an optimistic outlook for a new location. Also, there would be a CFO by now, to address the financial aspects of contracts and to reassure OEMs of the company's financial outlook. I read too much into the recent run-up and assumed that the price was telegraphing imminent success. There is also a lot of speculation in this stock because the idea of a plastic battery is very alluring. I sold on the recent free-fall and have only a small gain after investing in it since 1993. The way I would play it now is to put a day buy stop order and set it for about 25% above the close of the previous day and renew it each day. Then I'd set a stop loss about 10% under the buy price if the buy executes. This way I'd catch most of the gain if really good news comes out, and still have some downside protection with the stop loss. We don't know the timing of the OEMs. They have to plan marketing strategies and product deployment and they already have batteries available to them. The market is near to deploying LiPoly; it's in the press more and more, and it should create a stir in the marketplace. If it's not deployed in a really novel way, the edge on the competition will be blunted. The only thing really that's really imminent about the situation is VLNC's need to execute, more than the need of OEM's to deploy this technology. I have a very mediocre track record of buying and selling (I haven't traded) this stock and so you should not act on my musings of VLNC, but one might consider them along with all the other information that is digested. This stock loves to make a fool of me and I'm prepared to eat crow (I think it tastes like chicken). The stock closed at 8 7/16, so 1.25 X 8.4375 = 10.54. I think I'll go over to my online broker and put in a buy stop for 10.50 to be updated each day, and do the same procedure for ULBI. If and when it executes some day in the near future, it could spike down quickly if the news is ambiguous and as it has done in the past, so it bears steady attention.

To: I. N. Vester who wrote (6876)	1/7/1999 10:42:00 PM
From: FMK	Respond to of 27311

I.N.Vestor, I share your opinion that the picture for Valence is much larger than the palm pilot. Without naming customers, we could look instead at total watt-hours production capability. At the moment we should have two high-speed lines plus the Klockner. Their total capacity should be roughly as follows, using slightly higher specific energy than previous version specs: Line 1 8000 per day x 34 watt hr 272,000 Line 2 33,000 per day x 6.5 watt hr 215,000 Line 3 33,000 per day x 6.5 watt hr 215,000 total 700,000 wh/day x 340 days = 240 mln wh/yr. To break even, it should take 1800 per day x 34 x 340 or 20.8 mln watt hour per year. 20.8/240 equals 9% max capacity of the first 3 production lines to break even. The maximum capacity, of course, requires 3 shifts. By the end of the year, there should be 5 or 6 lines in NI. 1 shift per day for just the first 3 lines is 240 mln wh/3 or 80 mln watt/hr per year. Remember it takes only about 20 mln wh/yr to break even. 80 minus 20 equals 60 mln watt hr beyond that. It would seem reasonable that we should easily be running 1 shift per day on the first 3 lines by April, if not before, since there were already 270 employees in December. By that time, 1 shift per day production should be about 80/20 or about 4 times what would be required to break even. A contract or two in the meantime would convince us that it is really happening. What is the 60 mln watt hours past breakeven worth? At $2 per watt hour about $120 million. At 33% profit divided by 30 mln shares it amounts to about $1.30 per share earnings, just from one shift per day on 3 production lines. As Lev has indicated, laptop batteries will likely sell for $2.50 per watt hour, making $2 reasonably conservative. Are they going to make it? I still estimate the probability at 99.9%. I have repeatedly missed on the timetable. The increase in headcount from about 60 to 270 and the recent statement about "shipping in earnest" should indicate that April shouldn't be far off. If they don't take delivery of any more production lines and stay at 1 shift per day on just the first three lines, they should earn enough to justify a ($1.30 x 25PE) $33 share price without considering the joint ventures or future royalty income. This was just another way to evaluate the situation. I feel very comfortable being long the stock!

To: I. N. Vester who wrote (6876)	1/7/1999 10:57:00 PM
From: add	Read Replies (1) \| Respond to of 27311

I do think the action this week is from the probability that Valence may get the Palm contract. Li-Poly has been around for a long time, but not one significant contract yet in the whole industry. The markets are amazing efficient. In this case, no one knows who will get the contract for the PALM which will go into production soon, and that's the real point, an announced product with a Li-Poly battery. If Valence does not get the PALM contract when announced will its stock price drop ? I think it will, hence the run-up is at least in part based on the probability that Valence will get the contract. I will concede that you may be right that the run-up in part is due to the validation of the technology and that the whole industry benefits. Information is more or less equally distributed to all the investors. If one really wanted to make money, one would find out by hook or crook who supplied the battery for the Palm. We all expect Li-Poly to be big this year, but its a matter of timing. Everyday VLNC doesn't get a (any) contract is everyday that someone else is more likely to do so and that means less return on my investment. Eventually, we will have the big winners, the bit players, and the losers. Where will Valence stand in June ? I still feel that we won't have a contract until April 15th, and if we don't have one in hand by end of May, someone else will. In any case, the floorless will kick in July, so I plan to seriously look a selling in June if no contract has come in. Until then, I'm just holding and waiting. Its getting exciting, no ?