6-5-99
Hi, Bill & John,
Your recent posts regarding what might come next, and when, prompt me to speculate a little along lines that have puzzled, if not quite preoccupied, me since Henderson. It is a matter of Lev's Delphic pronouncements and a problem he faces we have never discussed on the thread. In the following, I will inch way out on a limb so that if it is cut off at the end of the month, I too will enjoy my 15 minutes of stupidity. But hey, speculating is part of waiting, and playing is fun.
There are three ingredients that comprise my rather speculative theory.
First, there are the SEC documents which refer to production by the end of the first quarter of fiscal 2000 (which is to say, June, 1999 -- this month). I haven't checked, but I think the earliest of these documents dates to December or January. These dates are not critical to my theory, but it would be helped if the dates are this early. What interests me is why Lev, the master of obscurity and evasion, would allow such specific statements in the documents, statements which practically imply a promise. Was it just that June was far enough in the future to be safe? Somehow, I just can't buy that. It is not his usual style. Ordinarily, he wouldn't say anything so specific at all.
Second, there is the matter of programs. I believe it was back in December or January that Lev began speaking of "programs" with customers instead of purchase orders. Certainly he spoke repeatedly of it at the shareholder meeting. At the meeting he talked about how it was necessary for Valence to work with an OEM from the earliest stage of product planning through its production and support. My understanding of his notion of a "program" is that it is this joint relationship focused on long-term product development in which the Valence battery would be an integral part. Of course we know he intended to steer us away from a simple-minded focus on purchase orders, but I've been puzzling ever since about what that might really have meant. Was his only intention to dampen our passion for a purchase order, or was there more being telegraphed?
Third, there is the matter of getting NI ready for production. Ordinarily, we have always thought of this as just a matter of getting all the equipment in place and balanced as quickly as possible. We have thought of it as a problem of technology and engineering. We have tended to assume that the sooner it was ready, the sooner there would be customers ready with purchase orders. But this, I think, overlooks the timing problem that is inherent in the situation, a problem that must be an important element within Lev's planning. The timing problem, as I see it, is that Lev wants the plant to be ready neither too soon nor too late. If ready too soon, it means Lev has wasted resources he cannot afford, resources he will have paid to accelerate the "construction" schedule, and resources he will have to pay for idle productive capacity, labor, and so forth. If ready too late, he runs the risk of losing potential customers by causing them to alter their product plans, providing an opening to competitors, and so forth. In effect, then, from Lev's point of view there is some optimal point in time for NI to be ready – neither too early nor too late. I have to speculate that he has been conscious of this problem for some time.
These three ingredients can be folded into a theory that is nothing more that speculation, but that implies we may hear something this month. My theory is that back during the winter, Lev worked out a program, or programs, with (potential) customers which gave them all -- the customer and Lev alike -- the ability to plan. Lev has explained the program from the customer's perspective – new product planning and all that – but implicit in that is the opportunity to define the "optimal" point in time when his own facilities have to be ready – neither too early nor too late. Such a program would allow him to schedule the "construction" activities, determine financial needs, and so forth. He would be ready when the customer was ready, and his costs would have been minimized. Perfect.
In brief, then, I am speculating there is a tie between the date in the SEC documents and Lev's emphasis on programs, and that we have received a strong signal to expect an announcement (of something) by the end of the month. Of course, such an announcement presumes nothing has slipped for either Lev or the customer. So, I go out on the limb and predict something by the end of the month. Of course, if Mr. Murphy has his usual way, John's July prediction may yet hold – or even worse, we may both have our 15 minutes of stupidity. Meanwhile, I continue to have all body parts crossed, the incense is still burning, and the children are ready.
Regards, lws |
