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Update: Universal Display Corp. Q3 Earnings Report
- Universal Display Corp. has report 3Q14 earnings.
- The report affirms my repeated warnings about host sales, and Canaccord proved timely in echoing them.
- The most important figure in the report has nothing to do with host sales and speaks to both the near and medium term prospects for UDC.
What Does This Recent Blue PHOLED Breakthrough Mean For Universal Display?
- Researchers developed a method to make blue PHOLEDs last 10 times longer.
- This technology will hopefully be commercialized by Universal Display.
- A blue emitter means a massive revenue boost for the OLED material developer.
Universal Display Corp.: Moving Towards The Light And Reaching For Blue Sky
- Two separate announcements each positively impact UDC's growth prospects.
- The first updates the near-term outlook for lighting, while the second is a long-awaited tech breakthrough.
- Valuation is discussed and an updated price target provided.
Universal Display, Apple And The Future Of Displays
- This morning's news, including iPhone tear-downs, makes it clear that Apple, and the display industry at large, is at the beginning of a transition to AMOLED screens.
- Universal Display is the primary beneficiary of this trend.
- The next big AMOLED producer and impact on other stocks as the industry develops are also discussed.
How Will Apple's OLED Watch Affect The OLED Market?
- It is pretty much confirmed that Apple's Watch uses a small AMOLED display.
- Effect on OLED capacity and material usage will be minimal, but it's a great validity for OLED technology.
- This may be very positive for Universal Display and LG Display.
- Universal Display reported 2Q14 earnings.
- While my industry checks were very accurate on material volumes, that prediction wound up being useless due to unexpected pricing pressure.
- Non-headline numbers from the report are the most important data points for predicting the pace of continued growth.
Universal Display Corp. In The Short And Long Terms
- Summary of recent events.
- Earnings predictions and points to look for in Thursday's report.
- Longer-term growth factors.
Universal Display's Second Key Customer Is On Its Way
- Universal Display currently relies heavily on Samsung Display, and one customer is a major pressure on the share price.
- But this will soon change, as more OLED makers will soon emerge.
- I expect LG Display, EverDisplay, Konica Minolta, Philips, LG Chem and BOE to soon be key customers for UDC too.
- Universal Display is losing market share at its major customer, Samsung.
- Samsung reported weak preliminary 2Q14 results and pointed to weakness in the smartphone market.
- Close to a third of material sales could be at risk if Samsung decides to go completely domestic with Cheil Industries.
- This article presents an outrageously optimistic scenario for Universal Display.
- The OLED market can grow 36X compared to 2013 (unlikely, but possible!).
- If this happens, Universal Display's stock price will be 20 times higher than today.
- Yes, this is a wild forecast for 2018. But it's a possible one.
Universal Display: Outstanding Revenue Growth Will Begin To Taper This Year
- Universal Display posted outstanding revenue growth of 152% y/y for the first quarter of 2014.
- Despite a 15% pop following the earnings report, UDC's stock has had difficulty holding onto the gains.
- Uncertainties about the prospects for the OLED display market persist.
- Revenue growth this year will probably be about 36%, in line with UDC's projections.
- Over the next year it will become clear that AMOLED screens are on a path to replace incumbents.
- Misunderstanding of recent headlines on long-anticipated developments has depressed shares.
- Conservative revenue predictions from confirmed production facilities represent 70% upside, with further growth likely.
- Last Fall, Manuel Asensio characterized a key European patent of Universal Display as without merit, predicting that it would be overturned to the detriment of UDC's business.
- The patent was overturned on November 22, but not on the basis of its invention claims, but because it didn't comply with the disclosure requirements of the European Patent Convention.
- It remains to be seen what effect, if any, the European Patent Office decision will have on UDC's Q1 earnings results, due May 8.
Samsung Galaxy Round's Real Winner: Universal Display
Tue, May. 13, 10:35 AM
- Korea's Naver.com reports Samsung (SSNLF) plans to launch the Galaxy S5 Prime, a version of its flagship phone that features a 2K (2560x1440) display, in mid-June via local carriers SK Telecom, KT, and LG U+. The phone will reportedly cost just $50-$60 more than the regular S5.
- There were reports the S5 would sport a 2K display prior to its launch. Samsung instead went with the 1080p resolution used for the S4, albeit with an improved OLED panel that has received good reviews.
- Samsung stated last November it plans to launch phones with 2K displays in 2014, and phones with 4K displays in 2015. Universal Display (OLED -0.1%) wouldn't mind seeing that happen, given OLED panels with higher resolutions require more OLED materials.
- Naver's report doesn't state whether the S5 Prime will feature a metal case, as has been previously rumored. Samsung has received its share of criticism for sticking with plastic cases for its high-end phones, and the company recently replaced its mobile design chief.
- Apple, a fan of using aluminum cases (the plastic 5C excepted), is expected to launch 4.7" and 5.5" iPhones in 2H14.
Mon, May. 12, 2:56 PM
- The Nikkei reports Sony (SNE +0.5%) is halting OLED TV development. Universal Display (OLED -5.2%) spiked sharply lower on the report, but has recovered some of its losses.
- Sony, which showed off the world's first 4K OLED TV in January, has already called off an OLED TV JV with Panasonic. Today's report follows one from a week ago stating Samsung is scrapping plans for an OLED TV plant, as sky-high price tags relegate the technology to niche status for now in spite of its image quality and form factor strengths.
- Universal is giving back a portion of the big gains it saw on Friday due to a Q1 beat and guidance hike that drew plenty of sell-side praise.
Thu, May. 8, 5:49 PM
Thu, May. 8, 4:59 PM
- Universal Display (OLED) now expects 2014 revenue to "reach the high end" of a prior guidance range of $190M-$205M; the consensus is at $199.2M.
- Materials sales (93% of revenue, given Samsunng licensing payments arrive in Q2 and Q4) rose 38% Q/Q and 176% Y/Y to $35.3M. Materials gross margin (closely watched) rose 220 bps Q/Q and fell 370 bps Y/Y to 72%.
- R&D spend rose 14% Y/Y to $10.2M, and SG&A spend 24% to $6.4M.
- Shares had fallen over the last six weeks due to a tech stock selloff and Samsung-related concerns.
- Q1 results, PR
Thu, May. 8, 4:14 PM| 6 Comments
Tue, May. 6, 3:52 PM
- Digitimes reports Samsung (SSNLF) "putting in weaker-than-expected handset component orders to the supply chain" amid toughening competition, particularly in China. The site adds Samsung, which last month launched its latest flagship (the Galaxy S5), is mostly expected to cut orders for cheaper smartphones.
- The report comes a few days after InvenSense (INVN -2.8%) offered a soft June quarter outlook, while estimating Samsung will return to accounting for a mid-30s % of revenue after making up 47% of March quarter sales.
- Strategy Analytics estimates Samsung saw its smartphone share fall 120 bps Y/Y to 31.2% in Q1 (89M shipments out of 285M), following many quarters of steady share gains. Strategy also estimates Lenovo (LNVGY) grew its share to 4.7% from 3.9%, and that Huawei's share was steady at 3.9%.
- Other Chinese OEMs, including Xiaomi, ZTE, and Coolpad, have also been seeing healthy shipment growth amid an industry mix shift towards cheaper phones aimed at emerging markets. Xiaomi (also a major InvenSense client) is looking to roughly double its shipments in 2014 to 40M.
- Other suppliers with heavy Samsung exposure: OLED, MXIM, SYNA, ANAD.
Mon, May. 5, 2:13 PM
- The Nikkei reports Samsung (SSNLF) has scrapped plans to build an OLED TV plant due to yield challenges and pricing concerns. Universal Display (OLED -7.7%) shares aren't taking the news well.
- Samsung, by far the world's biggest producer and (via its phone unit) consumer of OLED panels, is reportedly thinking of building a new plant to make small/mid-sized OLED panels for mobile devices. But it also likely won't release new OLED TV sets "for a while."
- Samsung and LG have launched OLED sets that are thinner and lighter than LCD alternatives (owing to their lack of a backlight), and which have earned praise for their brightness and picture quality. But sky-high price tags have relegated the sets to niche status. DisplaySearch estimates only 4,400 sets were sold last year.
- Sony and Panasonic called off an OLED TV JV last December.
Mon, Apr. 14, 2:53 PM
- U.S. first-day Galaxy S5 sales were up 30% relative to first-day S4 sales a year ago, Samsung (SSNLF) declares. The electronics giant also states sales in certain other markets doubled Y/Y.
- Pac Crest's checks also paint a favorable picture of U.S. S5 sales: The firm estimates average inventory sell-through hit 60% within four hours, and thinks sales were especially strong at Verizon thanks to a 2-for-1 promotion.
- Needham thinks S5 sales could reach 10M sales in 25 days vs. 27 for the S4. The firm is reiterating a Buy on touch controller/fingerprint sensor supplier Synaptics (SYNA +3.7%).
- Two caveats: 1) Samsung's numbers typically measure sell-in to carriers/distributors rather than consumer sell-through. 2) S4 sales also got off to a hot start, but later slowed down.
- Compared with the S4, Samsung has taken a no-frills approach with the S5, emphasizing practical features such as waterproofing/dust-resistance over sensor-based features (Smart Pause, Smart Scroll, etc.) often derided as gimmicks. The company has also provided modest discounts relative to the S4 (the S5 still typically goes for $600+ unsubsidized), as it contends with aggressive high-end pricing from Chinese Android rivals.
- Synaptics is outperforming, as is motion sensor supplier InvenSense (INVN +1.7%), which gets over 30% of its revenue from Samsung. S5 OLED materials supplier Universal Display (OLED +0.6%) is up slightly. Synaptics reports on April 24, and InvenSense on May 1.
Mon, Mar. 31, 6:52 PM
- An early teardown (translation) of Samsung's (SSNLF) Galaxy S5 has turned up the same 6-axis InvenSense (INVN) motion sensor found in the Note 3. The InvenSense part displaces the STMicroelectronics (STM) motion sensor found in the S4.
- Multiple Maxim (MXIM) power ICs were also uncovered. Though Barclays thinks Maxim lost the gesture IC slot it had in the S4 to rival AMS, it nonetheless thinks its dollar content grew ~10% (previous).
- An NXP (NXPI) NFC controller/secure element displaced the Broadcom (BRCM) NFC chip that went into the S4; Barclays estimates the design win will be worth $50M-$60M to NXP, assuming average content of $1. Broadcom is still expected to get $4/unit for supplying the S5's Wi-Fi/Bluetooth combo chip.
- Synaptics (SYNA) is believed to have the S5's touch controller slot and (though not revealed in the teardown) its fingerprint/swipe sensor slot. The company's S4 touch controller win delivered a windfall.
- Though a Skyworks (SWKS) power amplifier module and discrete amplifier were found, and a Wi-Fi filter is believed to be present, Barclays thinks Skyworks' content share likely fell, thanks to the absence of Wi-Fi switch/LNA content. It also thinks the total value of the S5's Wi-Fi RF content is lower due to Broadcom's use of internal power amplifiers (possibly a negative for S4 supplier ANAD).
- Separately, DisplayMate calls the S5's OLED display "the best-performing smartphone display we have ever tested," after doing an in-depth analysis. The display's color accuracy, brightness, ambient lighting performance, and power efficiency all receive high marks. OLED materials/tech supplier Universal Display (OLED) will be happy to hear that.
Thu, Feb. 27, 6:30 PM
- Universal Display (OLED) expects 2014 revenue of $190M-$205M, in-line with a $198.9M consensus. At the midpoint, the guidance range implies 35% Y/Y revenue growth.
- Materials sales totaled $25.5M in Q4, -16% Q/Q and +153% Y/Y; green host and emitter sales once more lead the way. Royalty/license fees +50% to $23.1M; Samsung licensing revenue rose to $20M from $15M a year earlier.
- Materials gross margin rose 210 bps Q/Q and fell 2290 bps Y/Y to 69.8%. Opex rose 52% Y/Y to $30.1M.
- OLED +0.9% AH. Q4 results, PR
Thu, Feb. 27, 4:55 PM
Thu, Feb. 27, 12:10 AM
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Wed, Feb. 26, 5:35 PM
- AHT, AIRM, AL, ALIM, AMRN, APEI, ARNA, ATLS, AVD, BAGL, BCEI, BID, BIO, CEMP, CHUY, CLNE, CRM, DCO, DECK, ELGX, EPR, EVC, GPS, HALO, HTGC, KBR, KOG, LINE, MDVN, MELI, MENT, MNST, MTZ, NGD, NMBL, NOG, OLED, OVTI, PKT, PODD, REGI, ROST, SD, SFM, SLXP, SPLK, SPNC, SQNM, SWN, TESO, TUMI, UHS, WES, WG, WTR, XTEX, YOKU
Mon, Feb. 24, 2:40 PM
- As expected, Samsung (SSNLF, SSNGY) has unveiled its next-gen flagship smartphone at a Mobile World Congress event (live blog). Whereas the Korean electronics giant trumpeted a variety of bells and whistles (some might say gimmicks) when launching the Galaxy S4 a year ago, it's taking a more low-key approach with the S5.
- The S5 has a 5.1" display, just slightly larger than the S4's 5" display. The resolution is unchanged at 1080p; past reports had pointed to a 2K resolution. Like Apple (AAPL) with the iPhone 5S, Samsung is integrating a fingerprint sensor into the S5's home button, and is offering a gold model.
- A 16MP camera supporting 4K video recording is included (the S4 has a 13MP camera), as is a perforated back meant to provide better grip. Qualcomm's (QCOM +0.2%) Snapdragon 801 baseband/app processor (2.5GHz., quad-core) powers the device. A heart rate monitor and slightly larger battery are also on board.
- Remarks from co-CEO JK Shin point to a shift in Samsung's product philosophy, one that arguably meshes with reports of a deal with Google to tone down Samsung's efforts to customize its hardware. "Our consumers do not want eye-popping technology or the most complex technology."
- Likely S5 suppliers with strong exposure: OLED, MXIM, SYNA, ANAD
Tue, Feb. 18, 9:43 AM
- BlackBerry (BBRY +3.9%) has been upgraded to Market Perform by FBR. Dan Loeb's Third Point LLC disclosed a 10M-share stake in the company after the close on Friday.
- Veeco (VECO +1.8%) has been upgraded to Hold by Canaccord ahead of tomorrow's Q4 report. Credit Suisse and JPMorgan have already upgraded shares this month.
- Universal Display (OLED +3.9%) has also been upgraded to Hold by Canaccord.
- Cerner (CERN +1.7%), Allscripts (MDRX +1.1%), and Medidata (MDSO +2.2%) have been started at Buy by Citi as part of a healthcare IT coverage launch.
- Care.com (CRCM -2.1%) has been assigned neutral ratings by JPMorgan, Morgan Stanley, and Stifel on underwriter coverage day.
Tue, Feb. 4, 2:07 PM
- Samsung (SSNLF) has sent out invites for a Feb. 24 event at the Mobile World Congress that's expected to feature the launch of the Galaxy S5. Separately, Korean and Indian sites indicate the S5, like the S4, will eventually be accompanied by a water/dust-resistant Active version, and a Zoom version featuring a camera with an optical zoom.
- The timing of the S5 event is three weeks ahead of when the S4 launched last year.
- The S5 is expected to have ~5.25" display with a whopping 2K (2560x1440) resolution, a 16MP camera, and a fingerprint sensor. It might also ship in both a costlier metal version and a cheaper plastic version.
- The launch of Samsung's next flagship will follow a downbeat Q4 report, and a reported deal with Google in which Samsung agreed to tone down its efforts to offer custom apps/UIs for its Android hardware.
- Samsung is facing stiffening competition from Chinese OEMs as Android sales continue seeing a mix shift towards cheaper hardware (often sold in emerging markets). Following an epic rise from 2011-2013, IDC estimates Samsung's smartphone share fell 30 bps Y/Y in Q4 to 28.8%.
- Companies likely to have strong S5 exposure (as a % of total revenue): OLED, ANAD, SYNA, RFMD, MXIM.
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