Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: mooter775 who wrote (6996)	1/11/1999 10:14:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 27311

Mooter, when you start and ramp up sales from zero to let say your number of $40 MM, cash flow also includes changes in working capital, namely accounts receivable and inventories (and few other less important items). Typically, one should assume that an increase (YOY) of $10 in sales requires an increase of $3 in working capital. If VLNCindeed get to the point of shipping, however, that should be taken care of with IDN financing. The second issue I have with your post is the assumption of 60% gross margins, such gross margins in this type of business are not going to be there long, if you know the "umbrella" principle. Is there some source that give us assurance that such high gross margins are available, particularly with a start up operation where yield are going to be initially much less then 80% and the cost reduction on the learning curve is not yet in place? Zeev

To: mooter775 who wrote (6996)	1/11/1999 10:24:00 PM
From: Larry Brubaker	Read Replies (2) \| Respond to of 27311

Mooter, sorry about taking the opportunity to jump all over Fred, but I have been jumped on so many times here that when the opportunity presents itself... I do not disagree that depreciation should not be a big factor in the total financial picture. My primary disagreement with Fred's "quotes of Lev has been the claim that Lev said 1,800 batteries represents less than one shift of production from one line. I do not know that this is untrue, but I have not heard Lev say this, and I know that Lev said Line 1's capacity is 5 cells per minute, not 5 batteries. Maybe he really meant to say 5 batteries, as Fred claims, but I will believe that when I hear him say it. And finally, I agree with Lev's comment that the SEC filings will provide a clue about when the wheels are turning. As of Sept. 30, they were not. Maybe they are by now and if so, we should see some confirmation in their next quarterly financial statement.

To: mooter775 who wrote (6996)	1/11/1999 10:49:00 PM
From: HQ	Read Replies (3) \| Respond to of 27311

Spinning the news anew... Now that it's official that we won't know of contracts until the customer actually advertises their product, essentially with a 'Valence Inside (TM),' it's interesting that certain posters would like the group to blame Fred for this event. No doubt they are happy that official news of contracts will inherently be delayed until after the fact. The usual delays in the SEC financial statements will likely mean that you'll see a Valence battery in a laptop, cellphone, or Palm V in the palm of your hand, before you see the revenue on the official balance sheet. No doubt in a few months we will all be trying to reverse-engineer the quantities shipped, and when they started, and at what rate, and whether that was just for 250,000 samples (e.g., 10000 samples x 25 OEMs, for more testing) or whether they were actual production product, delivered under contract. And if they stack up the product without shipping, until just after the end of a quarter, we won't know of revenue for another 3 full months. But I can hardly blame Fred. No, it's litigious lawyers who take on shareholder lawsuits for contingencies. So I'll take Lev's 'forward looking' statements and hints as telegraphing a lot more truth than circumstances allow him to acknowledge. I won't be waiting for SEC statements to decide if I think this company is a worthwhile investment. I DO have the OPINION that contracts ARE a done deal, and am willing to wait the extra 3 months to see it in my share price. But I won't blame Fred. He's done a good job of estimating outputs, though somewhat optimistic on the timelines. In the end, his numbers will probably be within a factor of 2 or 3 of the truth. With the numbers we're talking, that's close enough for me to see where this stock is headed. No doubt we will not be allowed any optimistic spin, such as, "Gee, maybe 'shipping in earnest' actually telegraphs delivering on an unannounced contract," or, "Gee, didn't Lev sound awfully certain that contracts themselves would be a DONE DEAL, and that it's really just a question of timing? Don't you suppose he meant something substantive by his statement that the 'customers like the product,' and that they 'have programs with various customers?'" Until recently, the mantra of the doomsayers has been, "No contract announcement, no reason for optimism; customers must not like the product, nobody's buying it." Now that we can expect to see an increased burn rate for the current quarter, will we be allowed to anticipate shipping and resulting booking of revenues? Nooooo, it'll probably be argued that that's just foolish VLNC buying all that equipment, hiring all those people, and making batteries no one wants. Might the market anticipate revenue sooner rather than later, since anything could be happening 'behind the curtain?' Or will our 'cool headed' friends help talk the price down by pointing out that we haven't seen the financial statement showing the revenue yet? Just imagine the price fluctuations that might occur now, on the release of each quarter's financial statement. Yeow! Meanwhile, Lev's comments about the CFO were hopeful. PS Thanks, Mooter, for the financial analyses.