Thursday, July 8, 2010

Dear GE: The Street Really Liked the Cree, Phillips Patent Deal (CREE; PHG)

The stock was up 8.4% yesterday.
For the last few years I've wondered why GE didn't just buy CREE. I know GE did the deal with Rambus but man, Cree's the class of the field.
From the Raleigh News-Observer:
The two largest companies in the expanding LED lighting market - Cree in Durham and electronics giant Philips - have agreed to share their technology.

The cross-licensing deal, announced Wednesday, involves patents for interior and exterior lighting powered by light-emitting diodes; it eliminates the possibility of a disruptive legal battle over intellectual property between the rivals.

"This is good for the overall LED market," said analyst Seth Dadds of GARP Research & Securities. "The reason I say that is early on in the adoption cycle, the last thing you want to hinder the adoption or uptake of LED lighting ... is a bitter patent dispute."

Such a fight could have distracted one of the Triangle's fastest-growing companies and discouraged investors in one of this region best-performing stocks.

Investors were happy about the news. Cree shares jumped nearly 8 percent to close at $66.07. The stock has more than doubled in the past year.

For years Cree's LEDs lighted car dashboards, cell phones, televisions and signs. More recently, the company moved into the interior and exterior lighting arena - making its own light fixtures and bulbs and supplying LEDs to lighting companies.

Lighting is Cree's fastest-growing business, and officials at the company - founded by N.C. State University scientists and alumni - tout their goal of replacing the common light bulb.
LED lights cost more than incandescent or compact fluorescent lights, but they're more energy-efficient and last longer.
Neither Cree nor Netherlands-based Philips, the corporate parent of Lumileds Lighting and the world's largest lighting company, specifies sales figures in the LED lighting space.

But Dadds thinks they are the two largest players and estimates that "the market share between the two companies isn't drastically different," because of some serious catch-up efforts on the part of Cree....MORE
Here's a bit of insight into how fast the market is growing, from Semiconductor Today:

LED market to grow from $7bn in 2009 to $10.7bn in 2010 then $20.4bn in 2012

The LED market made a great leap in second-half 2009, expanding dramatically from US$7bn in 2009 to US$10.7bn in 2010 (a growth rate unattainable by any other electronic product), according to the ‘Global and China LED Industry Report 2009–2010’ from market research firm Research In China.

On the one hand, the penetration of LED backlighting into notebook PCs has surged from 15% at the end of 2008 to about 60%, and is expected to hit 88% (or 98% according to some predictions) by the end of 2010. On the other hand, the use of LED backlighting in LCD TVs has increased from 0.01% at the end of 2008 to 10% currently, and is expected to reach 27% at the end of 2010, while the use of LED backlighting in LCD displays has grown from just 0.01% at the end of 2008 to 5%.

Along with increasing LED brightness and falling prices, the penetration of LEDs into general lighting is expected to increase greatly; the general lighting market is of huge potential, with the market reaching US$100bn. Promisingly, the LED market is expected to reach $20.4bn in 2012.

Research In China categorizes the global LED market as falling into three camps. The first consists of Japan, Europe and the America, encompassing the world's five biggest LED makers — Nichia, Toyoda Gosei, Lumileds, Cree and Osram — as well as Toshiba, Panasonic and Sharp, and possessing high-end technologies and abundant patents, as well as being dedicated to the ultra-high-brightness UHB-LED field for many years (targeting both general lighting and automotive lighting markets). Japanese enterprises pay little attention to LEDs for the backlights of consumer electronics, says the report, while European and American enterprises show no interest at all....MORE