Have you seen the light yet? How about the big picture? Here, let me help -- it's all about OLED.
First, some background
Organic light-emitting diodes may sound like a meal you'd find at Woodstock '68, but they're more like glow-sticks on steroids. Spray chemicals on an appropriate backing material and you get highly efficient lighting panels or low-power digital displays.
Power efficiency is perhaps the biggest draw of this technology, given our quest to conserve energy, oil, and the environment while getting the most life out of our batteries. But don't forget about flexible screens, brilliant true color, and the ability to make these things on basically a juiced-up inkjet printer. It's hard not to get excited about OLEDs when they aim to eventually replace every single screen, light bulb, and fluorescent tube.
Then, the news
Technology analyst house iSuppli just updated its OLED analysis with fresh growth expectations. Today, you're not likely to see an OLED screen outside that ultra-thin, hyper-expensive Sony
The total market for advanced active-matrix OLEDs in 2007 was a mere $67 million -- but iSuppli sees that sum skyrocketing to $293 million this year. It'll be a $1.2 billion market by 2012, mostly in handheld gadget screens, and more than $4.5 billion in 2014, when big-screen OLED televisions should be commonplace. If iSuppli is anywhere near correct on this call, it's 82% compound annual growth from 2007 to 2014. And that's just in high-end displays, no lighting or passive screens.
Taking advantage of the situation
So how do you invest in that hypergrowth? Sure, you could pick up some Sony stock -- but its OLED sales will eat into its LCD and plasma revenues. Same goes for the electronics retailers, and I wouldn't expect Best Buy
No, the real opportunity lies with the companies that invent, improve, and sell the actual OLED technology. The key OLED patent holders are Eastman Kodak
Kodak and Sumitomo each employ more than 24,000 people all over the world, and Kodak's $10.3 billion in trailing sales would hardly move if you add in a few hundred million dollars of new OLED license fees. Universal's payroll goes about 60 names deep, with about $11 million in trailing revenue. Give them just a small slice of this market when it goes mainstream, and you're looking at hypergrowth that would make Hansen Natural
Finally, taking Foolish action
Before it's all said and done, the OLED market will grow, evolve, consolidate, and mature. iSuppli sees plenty of room for "future licensing, sharing, and trading of patents, as well as disputes and legal action." Kodak or some new giant entering this market might buy Universal Display for its patent portfolio alone, and if not, the pure-play research outfit is turning the corner into commercial success right about now.