Universal Display Corp. Should Ride the Growth in OLED TV Monitors

 |  Includes: OLED, SNE
by: John Henderson

OLED displays (Organic Light Emitting Diodes) are making progress into the consumer marketplace. An OLED monitor is extremely thin, flexible and delivers a crisp picture with outstanding colors. Recently Sony (NYSE:SNE) introduced an OLED TV that is available here in the US.

What brought my attention to this space is the March 2009 edition of Laptop magazine. The magazine had a story on the OQO Model 2+, a handheld computer the size of a calculator. According to the article, “the Model 2+ “wows with its 5-inch, OLED resistive-touch display, which is significantly brighter than its predecessor, and has superb viewing angles.” After reading the Laptop magazine article, I decided to revisit an OLED tech play called the Universal Display Corporation (NASDAQ:PANL).

From Universal Display’s 10K:

“We have established a significant portfolio of proprietary OLED technologies and materials. We currently own, exclusively license, or have the sole right to sublicense more than 940 patents issued and pending worldwide… We continue to work with many other companies who are evaluating our OLED technologies including Sony Corporation and Seiko Epson Corporation.”

Existing customers include Samsung SMD and Konica Minolta Holdings. In the year ending 2008, Universal Display had revenues of $11.075 million a slight drop of about $200,000 from 2007 and reported a net loss of about $19 million vs. a loss of about $16 million in the prior year. An increase in SG&A expenses and R&D accounted for a substantial portion of the increased losses. As of December 31, 2008, the company had no long term debt and had cash and short term investments of about $77 million. The company burned about $5.5 million in cash in 2008. The market cap is about $285 million. If the company can license its technology further and the OLED market continues to increase in size, then this should be an interesting growth story.

Disclosure: The author does not have a position in PANL at this time.