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

To: I. N. Vester who wrote (9901)	3/26/1999 10:40:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 27311

Vester, the value of that kind of analysis is that it attempts to take the emotions and the glamour out of the picture and analyze the prospects based on pure numerical values. When you use this in managing a portofolio of a plurality of high risk/high reward situations, it helps you weigh the pro and cons. The fact that they have already gone through $150 MM or so of OPM is an indications that they are almost as good as Gillette <VBG> (they spent a billion bucks to add a third blade to their razor, including $600 MM in launching it), but more seriously, it is a "baggage" that they carry with them and will influence future performance. Zeev

To: I. N. Vester who wrote (9901)	3/26/1999 11:09:00 PM
From: Razorbak	Respond to of 27311

Altman Z-Score Dear Mr. Vesty: You seem like a nice chap. I just have a few more comments I'd like to make about your analysis. <<Zeev, there is a serious problem with the whole calculation>> Lemme guess. You don't like the result??? <g> <<The other big factor in the A-Z involves the market cap. That is the only positive value and it is large enough to have a very big weight. If you throw out all the negative X values, X4 is very big and indicates strong probability of survival.>> LOL. But of course... if you throw out all the negative X values! <vbg> <<If you see the glass as 3/4 empty, look at these fools who burned $145M but still have no product! If you see it as 3/4 full, the value of the technology they have developed is worth about $5/share, what they've spent on it (assuming 30M shares).>> Let's see. 3/4 + 3/4 = 1 1/2. Where did the second glass come from? <g> <<If you assume no PO is imminent, then they should be priced for bankruptcy proceedings. In that case we'd have to figure a liquidation valuation of their I.P. If they can't get it to work well enough to sell it, maybe nothing. If it works, maybe quite a lot (tho maybe not at a liquidation auction).>> Hey, we finally agree on a point. Bravo! <<The big questions are 1) are the PO(s) big enough for them to stop bleeding $$ and 2) if the PO's are big, how much working capital will they need to avoid death by sales. I really don't think that will be a problem because if they build it and sell it money will come.>> Ah, the good old "field of dreams" argument. Did you think of that one all by yourself? <he he> <<How much they spent in the past doesn't seem like useful info regarding their chances for survival.>> As Cramer would say... Wrong! The model is very sensitive to EBIT (short-term lagging indicator) and Retained Earnings (long-term lagging indicator), because lack of profitability is one of the leading causes of bankruptcy. <<But even assuming additional $40M in the till, the A-Z is still overwhelmed by the $145M already spent on R&D. So I doubt you will ever get much value out of A-Z.>> Perhaps that should be telling you something? <<And it's a bit too deep for most of our fellow threadsters to get into. Far more worthwhile to frame the discussion in more common sense terms, don't you think?>> Well, there you go... the thread residents are stupid. I did not know that. ;^) TTFN Razor

To: I. N. Vester who wrote (9901)	3/27/1999 10:35:00 AM
From: Gordon Quickstad	Read Replies (1) \| Respond to of 27311

Good post, Vester, Esq. Zeev probably agrees with you in every detail in your thorough analysis. He seems to have an obligatory role here to worry VLNC investors. I suspect he has an investing style that profits from volatility (perhaps options?). He sits at the keyboard all day and probably watches the stock very close and may be in and out more that once a day. To watch an issue very close precludes jumping around to other threads. Now, I've heard traders rarely make good over the long run. Zeev, care to comment?