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

To: I. N. Vester who wrote (6882)	1/8/1999
From: add	Read Replies (3) \| Respond to of 27311

Recent article from the darnell web site(below). If Sony and Sanyo starts producing do you think Valence has a chance ? Updated:December 14th, 1998 Next Update:January 4, 1999 What's the Buzz About Batteries? In the media world of computers, telecommunications and broadband convergence, power supplies are not very sexy. Television and newspaper reporters are seldom knocking down doors to interview a dc/dc converter manufacturer. So imagine my surprise at being called recently by all sorts of publications, including the New York Times, to be interviewed about... lithium-polymer batteries. The Darnell Group gets called a lot about the power supply industry, but seldom is there a steady stream of calls about one single power supply. Lithium-polymer has grabbed the media's attention, probably because of Sony's and Sanyo's announcements that they will begin commercial production of these batteries next year. Suddenly entrepreneurs are interested in investing in it. Trade magazines are asking if it's all hype. Newspapers have never heard of it and want a primer for their readers. When a technology - even a normally low-profile power supply - catches the attention of the masses, it will be pushed onto the media stage. As a service to those groups who haven't called me yet, I'm going to provide this "cyberbrief" on lithium-polymer batteries. Everyone always asks the same questions, and it seems an expedient way to address the need to know. It'll also minimize the chance that I'll be misquoted. (1) Who are the major players in the market? There's no question that Sony and Sanyo have brought attention to these batteries that were formerly relegated to the R&D lab. Companies like Lithium Technology, Ultralife and Valence Technology have been trying for years to "introduce" commercial production of lithium-polymer batteries without success. Sony and Sanyo have the money, resources and production processes to make Li-polymer a reality. But will they actually do it? That remains to be seen. Ultralife just entered a $40M venture with a large Taiwanese firm to produce Ultralife's advanced solid polymer rechargeable batteries in Taiwan, so the wheels have started to turn. (2) What applications will drive the market? At this point, laptop computers and cellular phones have the best shot at sparking demand for Li-polymer. Laptops because they're already a higher-priced item using lithium-ion batteries, which will help absorb the initially high costs of the Li-polymer batteries; cellular phones because they're a fast-growing market that can take advantage of Li-polymer's flexible form factor. On the horizon? Digital cameras. As a side note, I've heard that two of the major power tool manufacturers are designing their next-generation products with nickel-metal hydride batteries in mind. This is a move away from nickel-cadmium, which has thus far dominated that market segment. Li-polymer for power tools is probably a stretch, though, since it has the lowest power density of any of the rechargeables. (3) What makes Li-polymer so great? Everyone I've talked to seems to think that Li-polymer's flexible form factor is its only advantage over lithium-ion batteries. This is one of its big claims to fame, but there's more than that. Safety during recharging is a big issue with Li-ion, and Li-polymer (at least in tests so far) appears to be way ahead of the game in this respect. Also, the flexible form factor means that Li-polymer can be manufactured in smaller sizes, giving it higher energy density and making it lighter-weight. (4) Okay, something must be wrong with it - what will keep people from buying it? As with everything, cost will be a big factor. The Darnell Group is updating its Worldwide Battery Pack Market Forecast, and this will be the first time we include Li-polymer in our forecasts. Up until now, it's been an emerging technology, but we do see commercialization on the horizon. As with any new technology, however, it will take a while for production costs to come down and demand to go up enough to make Li-polymer competitive with Li-ion. If you have an expensive product to begin with, the high cost of a new battery technology can sometimes be absorbed. But with cell phones, which are declining in price, that extra cost may not be worth it. Don't forget that most cell phones still have Ni-cd batteries in them. That's a big jump to Li-polymer. (5) What about alternative technologies? Energizer said rechargeables will decline; Duracell has these new zinc-air batteries; etc. etc. The one thing I can positively say is that companies have a lot of self-interest. If your main business is primary batteries, you're going to interpret the market in a way that downplays secondary batteries and emphasizes new technologies that compete with lithium, such as primary Zn-air batteries. Zn-air can be made rechargeable, but most commercial Zn-air is primary. I doubt all this will get me a spot on "60 Minutes." Li-polymer batteries just don't strike me as the "next big thing" of the battery world. They are simply a variation of an existing technology. But that's the difference between a technology craze and something truly revolutionary: the real breakthroughs seldom receive media attention. And I don't know if that's good or bad for Li-polymer batteries. We would like to hear your comments on the topics discussed in this column. Please email them to Linnea Brush at linnea@darnell.com We welcome the opportunity to publish opposing opinions. Please email Jeff Shepard at jshepard@darnell.com

To: I. N. Vester who wrote (6882)	1/8/1999 4:30:00 PM
From: add	Read Replies (2) \| Respond to of 27311

I agree that the market is large enough for a number of players. However, the later the contract comes in the more likely that Valence will not be the BIG winner. If the had produced viable batteries a year ago, they would have had a monopoly. Can you imagine the amount of loot !!! Now, it seems like that won't be happening. Valence may share the market with a few others. That's very profitable for us also. If by the end of the year no contract is announced, Valence will not survive or the current stockholders will get massively diluted. So each day a contract does not come in, is a day that the shareholders are losing some value. It is very important at this stage that someone bring a product to market first or soon after the first announcement.