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

To: LTK007 who wrote (9282)	3/13/1999 9:40:00 PM
From: Zeev Hed	Read Replies (3) \| Respond to of 27311

Max, this was replaced with a more current S-3A (2/26) where the Preferred A is no longer a floorless, but a second preferred B was issued and it would become floorless sometime in July if the price of the stock drops under $6. Of course, the bulls believe that by then all clouds will be dispersed since VLNC will be in full production. The Bears point to the fact that by the end of this month the till will be empty and unless other financing is arranged or at least a major PO is received (so as to trigger the Irish Government's financing, the company will have to go back to the financial wells. If that happens the bear fear that another possibly more ominous financing will be in place. The super bears probably believe that a full fledge death spiral will ensue. The bulls believe in the theory of the "White Knight", stating in essence that Berg's (Bacharat Electronics?) additional financing to the tune of $7.5 MM will kick in, and everything is absolutely guaranteed to be "nice and dandy". I personally believe that VLNC still has some rough times ahead of it. I have yet to see an initial ramp up of production being undertaken without a hitch, that leaves very little room for error. Typically they will face the Egg and Chicken situation in which very large customers will be reluctant to commit to redesigns (of their own portable to integrally accommodate the VLNC batteries) without having seen mass production product and plant experience first, of course they cannot show that without a major order. Typically companies solve this problem by identifying initial smaller customers that are in essence guinea pigs and get on the market in a modest way, rarely profitable for few quarters. I believe they had an opportunity they turned down in which the batteries would have been "patched" on an existing line of portables, following, probably, the philosophy of "all or nothing". If what eventually happens, is indeed a series of smaller and not particularly profitable orders, yet allowing VLNC to go down their own "learning curve", VLNC may survive, but the dilution from here to finance the transition from R&D to full production may be more severe than what the bulls believe. The bulls see no problem in getting four lines fully operational (and according to FMK calculations working at 100% efficiency) as soon as a PO is in house for a good few hundred thousands cells or even few millions batteries per year. Where will the future actually be? I know not, best case somewhat better than I describe it, worse case, a heart ache for everyone (but Bill Wexler). Zeev