Universal Display – What we expect
Universal Display (OLED) will release 4th quarter results tonight after the close. Based on full year company guidance ($190m - $200m), 4th quarter revenue should be between $65.7m and $75.7m, with consensus at $68.6m. UDC does not give EPS guidance, but consensus for 4th quarter is $0.42. That said, we are watching for the following:
· A continuing increase in emitter sales, particularly red emitter
· Some incremental improvement in LG OLED TV royalty
· An increase in non-Korean product sales
· A realistically optimistic view on 2017 sales that has some correlation to OLED capacity growth
· Color relating to the expiration/renewal of the Samsung Display (pvt) IP license and material supply agreements
These are hefty expectations and rarely do companies think with the same perspectives as we might, but the phrase ‘two out of three ain’t bad’ comes to mind when setting our quarterly and yearly expectations. That said, the tech press machine has adopted OLED as its new darling and has been ‘educating’ the public into a frenzy since the rumors that Apple (AAPL) might adopt OLED for its upcoming iPhone family release hit the presses (just an expression since there are no ‘presses’ anymore).
Visions of “Back to the Future” type displays are now emblazoned in the minds of everyone from Japanese schoolgirls to advertising executives, and expectations continue to grow at geometrical rates, but we know that reality bites, and technology develops at a pace not set by expectations but by companies with budgets, shareholders, competing projects, and high capital costs. We are very big proponents of OLED as a technology for displays, for a variety of reasons, so we make cautionary statements out of the desire for the successful implementation of the technology, but we have seen the same ‘expansion’ of expectations for the OLED space before, only to see disappointment when the reality does not live up to hyped up expectations. UDC is only one company in the OLED supply chain, albeit an important one, and all face the issues that are typical of a major manufacturing and technology change. We caution investors to set realistic long-term goals for investments in the OLED space rather than focusing on the latest patent or Digitimes story.
· A continuing increase in emitter sales, particularly red emitter
· Some incremental improvement in LG OLED TV royalty
· An increase in non-Korean product sales
· A realistically optimistic view on 2017 sales that has some correlation to OLED capacity growth
· Color relating to the expiration/renewal of the Samsung Display (pvt) IP license and material supply agreements
These are hefty expectations and rarely do companies think with the same perspectives as we might, but the phrase ‘two out of three ain’t bad’ comes to mind when setting our quarterly and yearly expectations. That said, the tech press machine has adopted OLED as its new darling and has been ‘educating’ the public into a frenzy since the rumors that Apple (AAPL) might adopt OLED for its upcoming iPhone family release hit the presses (just an expression since there are no ‘presses’ anymore).
Visions of “Back to the Future” type displays are now emblazoned in the minds of everyone from Japanese schoolgirls to advertising executives, and expectations continue to grow at geometrical rates, but we know that reality bites, and technology develops at a pace not set by expectations but by companies with budgets, shareholders, competing projects, and high capital costs. We are very big proponents of OLED as a technology for displays, for a variety of reasons, so we make cautionary statements out of the desire for the successful implementation of the technology, but we have seen the same ‘expansion’ of expectations for the OLED space before, only to see disappointment when the reality does not live up to hyped up expectations. UDC is only one company in the OLED supply chain, albeit an important one, and all face the issues that are typical of a major manufacturing and technology change. We caution investors to set realistic long-term goals for investments in the OLED space rather than focusing on the latest patent or Digitimes story.
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