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Nachos
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I am an individual investor who took up an interest into the stock market in 2006 and have been investing my own money ever since. Enjoy sharing my views and reading about other people's thoughts. I find it to be the best way to learn more about investing.
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  • Could Samsung be interested in buying Universal Display?

    In Universal Display’s Q3 2010 conference call, Steve Abramson mentioned that they further extended their existing agreement with Samsung until the end of the year which is making me wonder why it’s taking so long for the two to hammer out a new deal.  I think the delay is a positive signal for Universal Display as it probably means they have some negotiation power over the much bigger Samsung.  I’m just wondering if the talk has gone off a tangent and possibly be about Samsung acquiring Universal Display?  Steve Abramson refused to answer any questions regarding the negotiation calling it “really confidential” in the Q&A session.

    If so, this is not the first time Samsung tries to acquire a company for their IP in the process of negotiating licensing deals.  Back in 2008, Samsung tried unsuccessfully to acquire Sandisk while negotiating a new licensing deal with them for NAND technology.  It’s also no secret OLED is important to the future of Samsung Display.  They are currently the leader in OLED displays and will increase their production ten folds next year.  OLED is not only strategic to Samsung’s mobile phone business as they’ve heavily advertised the benefits of their Super AMOLED display, it will also separate them from their competitors in the cutthroat TV business.

    Besides LG already bought Kodak’s OLED business last year and back in 2007, Sumitomo Chemical bought Cambridge Display Technology for $285 million.  It certainly will make sense if Samsung decides Universal Display will provide them a valuable portfolio of OLED IPs.  On a side note, it seems like Universal Display already have some high level scientists who are Korean, as can be seen here and here so the marriage with Samsung certainly won’t be lost in translation.



    Disclosure: Long PANL
    Tags: OLED, technology, OLED
    Nov 08 11:53 PM | Link | Comment!
  • Do not underestimate the future of MEMC

    MEMC’s stock price promptly tumbled below $10 after their disappointing 2010 Q2 earnings, mainly due to lower revenue from SunEdison.  We’re all aware of the difficulty in predicting the earnings of SunEdison on a quarter by quarter basis so the reaction of the stock price seems kind of harsh.  I believe with MEMC, it’s worth looking at the bigger picture.

    MEMC has always been a silicon wafer manufacturer where it’s earning is directly tied to the pricing of wafers in which they have no control over.  It’s a highly cyclical business and that reflects pretty clearly on the history of MEMC’s stock price.  In this current downturn, MEMC has taken advantage of their cash hoard and acquired SunEdison and Solaicx.  In my opinion, both highly complimentary acquisitions that will no doubt boost their solar business in the future.  Being an optimist and shareholder, I’ll even go a step further and say with these two acquisitions, MEMC has begun to transform itself into a vertically integrated, distributed energy company.  We already know that MEMC is very capable of manufacturing solar wafers but in the long run, that’s not a very attractive business to be in.  They put themselves in direct competition with the low cost Chinese solar companies where the motto is “reduce price till you’re out of business then reduce some more”.  The value in the solar business has moved downstream and the acquisition of SunEdison allows MEMC to capture the entire value of the solar business from solar wafer to installation, financing, and maintenance.  In effect, that makes MEMC look more like a utility company or more accurately, a distributed energy company that will compliment traditional utility companies.   The side effect of this would be more stable earning and break free from the cycles of silicon wafer pricing.  As the cost of solar energy gradually drop toward grid parity, SunEdison business will look more and more attractive.  In five years, I would be disappointed if SunEdison is not MEMC’s biggest segment.   Being vertically integrated will allow MEMC to have a cost advantage over their competitors although at this point it’s too early to predict which solar technology will eventually turn out to be the most cost effective.  However I don’t doubt that solar will be a significant mix of our energy generation in the future.  MEMC has positioned itself to be a player in solar even if silicon goes out of favor.



    Disclosure: Long WFR
    Aug 10 2:01 AM | Link | Comment!
  • Midyear update on Universal Display and OLED
    Since my last posting on Universal Display, it finally came alive and hitting $20 for the first time in a long time.  News about the shortage of OLED displays in the market and Samsung hoarding their own supply definitely boosted the sentiment on OLED technology.  You can read about it here, here, and here.  On another more worrisome note, it’s not like OLED display is a clear differentiator on mobile phones.  When you compare the best of OLED (Samsung Super OLED) to the best of non-OLED (Retina display on iphone 4), it’s still a judgement call.  The good news is OLED is still early on it’s maturity curve so it has plenty of room to improve while LCD has obviously been around for ages.  Which begs the question of what is Samsung thinking when it decided to call it’s OLED display the “Super-OLED”?  Shouldn’t they save their choice of superlative adjective till the finale?  You don’t hear Coach K calling his team a “great team” in November.  You wait till April before bringing out the big guns.  Let’s not over hype and under deliver again as we’ve seen plenty of time with OLED.  On the last note, Universal Display’s agreement with Samsung ended and they are in the process of negotiating a new one.  Hopefully that’ll yield some positive news for Universal Display but you never know.  The last time I compared Universal Display’s market cap to Samsung’s it didn’t exactly look very comparable.

    Disclosure: Long PANL
    Tags: OLED, Technology
    Jul 15 12:12 AM | Link | Comment!
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