Inside Wall Street
JUICED UP OVER A NEW BATTERY
So we need another kind of automotive battery? General Motors thinks so. The giant auto maker, at least, believes it's worth investing $20 million in Valence Technology, which has developed a proprietary solid-state lithium polymer battery. GM's auto-parts division, Delco Remy, has just signed a three-year, $20 million research and development pact with Valence to develop the battery.
"It's a revolutionary battery that has significant price and performance advantages over both existing and emerging technologies," says analyst Thomas Lloyd-Butler of Montgomery Securities in San Francisco. The battery, he explains, is three to four times more powerful than existing ones and can be produced at a significantly lower cost than available batteries. While existing batteries use the traditional liquid electrolyte, the solid-polymer electrolyte used in the Valence battery makes the product lighter and much safer, he adds. Delco placed an initial $350,000 order for a limited number of the batteries, to be shipped in August.
Whispers are that a major communications company will sign a $100 million strategic alliance pact with Valence in a month or so. That company may also buy an equity stake. Valence Chairman Lev Dawson, who owns 47% of the stock, says serious talks are going on but refused to be specific.
Valence went public on May 7 at 8, and hit 10 in a month. It has since pulled back to 9 1/4 on July 29. Such institutional investors as Putnam Cos. and Wellington Management were buyers. Lloyd-Butler says Valence will be in the red through the end of 1994, but he sees earnings of 75 cents in 1995, $1.50 in 1996, and $3.25 in 1997.GENE G. MARCIAL