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Could 2010 be the year Universal Display breaks out?

|Includes: Universal Display Corporation (OLED)

I’ve owned Universal Display (NASDAQ:PANL) since 2006 and it’s just been up and down with plenty of hype about OLED tampered by an equal amount of disappointments.  In the past three years, how many times have we heard of companies including OLED TVs in their road map only to cancel it later.  So far only Sony and LG have released an OLED TV and both are prohibitively expensive for what you’re getting in return.  We’ve also seen plenty of gadgets and devices that uses OLED screen but only as a single color display.  Similarly, Universal Display had formed partnerships with the major players in the display industry such as Samsung, Chi Mei, and LG but it’s stock continue to trade in the teens, only briefly breaking $20 in 2007.  You can’t really blame the investors for not showing more enthusiasm as their commercial revenue has stagnated.

Commercial Revenue:

Q1 2008: $1,555,065

Q2 2008: $1,395,487

Q3 2008: $1,324,924

Q4 2008: $1,355,282

Q1 2009: $1,369,137

Q2 2009: $1,239,056

Q3 2009: $1,621,416

OLED has taken a long time to mature while in the meantime LCD has quickly evolve to a point where OLED is no longer the clear cut superior technology for TV.  In 2006, I was blown away by the picture quality and thinness that OLED promised.  Today, you can buy a LED TV that is just as slim and stunning, ok, maybe not nearly as good as OLED but at least you’ll be able to afford one without starving yourself.  At this point, I don’t see how OLED will ever be the preferred technology in TVs unless some geniuses figure out how to print these things as cheap as my toilet paper and make the blue material last longer than my light bulb.

That said, I’m finally starting to feel more confident about the prospects of OLED and Universal Display.  A lot has changed since CES 2010.  Samsung has gone OLED happy and will be slapping OLEDs on almost all their high end mobile gadgets this year.  Samsung is currently the world’s biggest manufacturer of OLED displays and is Universal Display’s biggest commercial customer.  We should start seeing those money flowing to Universal Display’s top line this year.  Other consumer device makers have also started to incorporate OLED displays into their products and those will also contribute to Universal Display’s growth.  I’m hopeful that by the end of 2010, we should also see maybe one e-book or laptop type of device with 10″ – 12″ OLED display hitting the market.

Universal Display also saw a huge growth in development revenue in 2009 from $5,444,466 in the whole of 2008 to $6,705,996 till the end of Q3 2009.  They have been working with US Department of Energy to create a viable OLED lighting product and the US Army on flexible displays.  Although we won’t see these products being commercialize anytime soon but look for Universal Display to continue to benefit from cooperation with the government.

Disclosure: long panl