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Needham analyst Michael Lew notes that while there is no guarantee Valence ( VLNC) will find a favorable resolution for its intellectual property disputes, and no guarantee it can lower costs and expenses to make its products more affordable or stay competitive amongst peers with larger assets, he sees "accelerated" market adoption of the company's products due to its reliable technology.

Fleets, including those of transit buses -- one Valence customer group -- require reliable technology to deliver "on time" services, Lew pointed out. MDB Capital analyst Jon Hickman tells clients that though Valence's fiscal 2010 revenue of $16.1 million was lower than he had expected, he's encouraged by the company's recent order trends and management's comments about its large and growing backlog of orders. He also notes the expansion of Valence's patent portfolio to more than 420 U.S. and international grants and patent applications in fiscal 2010.

Needham's Lew said he'll become increasingly optimistic about Valence stock once it resolves its intellectual property dispute with the University of Texas. At the same time, Wm Smith analyst Rob Young expects the company's overall intellectual property disputes to find a resolution, as they have so in the past. He thinks that quarterly legal costs will fall to $500,000 from around $1.5 million.

Still, Young cautions that Valence's gross margin will eventually consolidate in the low 20% range from 22% sequentially, and that this will require continued prudence in cost management in the face of possible pricing pressures.

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