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Universal Display Unleashes the Charge of the Light Brigade

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Call the fire brigade! Universal Display (Nasdaq: PANL  ) is on fire!

OK, cancel the 911 call. Company headquarters in Ewing, N.J., aren't engulfed in roaring flames. The stock is on fire.

Share prices have leapt 73% in August on the heels of several helpings of good news. A quick 12% jump in after-hours trading comes courtesy of consumer electronics giant Panasonic (NYSE: PC  ) and chemicals manufacturer Idemitsu Kosan, whose joint OLED lighting venture just signed a three-year deal for technology licenses and material supplies from Universal Display. The gains didn't last long; Universal Display moved back to trading around yesterday's close. Still, the continuing deluge of licensing deals is a good omen for the OLED giant.

I'm pretty sure the Japanese duo was watching Korean tech giant Samsung to see how that OLED deal would be structured. Like the Samsung tryst, this lighting contract is divided into prepaid and ongoing components, including intellectual property rights and materials.

Like I said when Samsung penned that multiyear license and materials deal, this was the start of an avalanche of similar deals. OLED technology is currently all about smartphone screens, made chiefly by Samsung and LG Display (NYSE: LPL  ) , with the next step in many an investor's mind being larger tablet and TV displays. Sony (NYSE: SNE  ) has already visited the TV avenue, and LG is going there next year.

This deal underscores the oft-forgotten third leg of the OLED growth story, which is in household and industrial lighting. White OLED panels could pose a real challenge to traditional LED lights in terms of power-sipping efficiency, streamlined and low-cost manufacturing lines, and design versatility.

Traditional light bulb and fluorescent tube makers such as Siemens (NYSE: SI  ) subsidiary Osram and General Electric (NYSE: GE  ) are going to lose business in this paradigm shift, though both are hard at work on new-age solutions of their own. And even LED specialist Cree (Nasdaq: CREE  ) has reason to chew its proverbial fingernails when Universal Display joins a global powerhouse like Panasonic this early in the game.

If you bought Universal Display shares when our Rule Breakers newsletter first recommended the stock, they're worth more than five times your original investment today. Congratulations! You're probably anxious to see what more market-smashing investments my own favorite newsletter team has on tap -- and you're in luck. Just click here to grab a totally free 30-day trial pass to Rule Breakers, and frolic in nearly seven years of hugely profitable market research.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Motley Fool newsletter services have recommended buying shares of Universal Display. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio, follow him on Twitter or Google+, or peruse our Foolish disclosure policy.

Read/Post Comments (6) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 30, 2011, at 2:40 PM, EquityBull wrote:

    I bought in around 12 based on fool recommendation and my own research afterwards. Bright future with lots of upside still ahead here.

  • Report this Comment On August 30, 2011, at 3:18 PM, Denverdude123 wrote:

    OLED's will have to triple their output of Lumens/Watt to be competitive with Solid State LEDs. They also will have to be price competitive with SS LEDs which are well on their way to being the Bright Light of Choice. I don't see either happening.

  • Report this Comment On August 30, 2011, at 6:40 PM, manojv wrote:

    What's the revenue $ from these deals? Do they list this anywhere. How is the deal structured ? Per unit, one time royalty, or something else. For a 2.39 Billion market cap, how much money would PANL need to raise to justify their market cap?

  • Report this Comment On August 30, 2011, at 10:30 PM, Brettze wrote:

    OLED is not some kind of light fixture that you will be able to put in your flashlights, lamps or be able to buy it off the shelves.. OLED will be coming pre installed in stuff you buy. OLED is not some kind of bulb like CFL or LED.. It is a flat glass or arylic sheet that just blinks on.. Maybe you can frame it and nail it on the wall with a cord plugged to the wall outlet, I am not sure..

  • Report this Comment On August 30, 2011, at 10:31 PM, Brettze wrote:

    How many Poles do it require to replace an OLED light fixture...

    None cuz they dont know what it looks like..

  • Report this Comment On August 31, 2011, at 8:29 PM, cubanstockpicker wrote:

    OLED is to make phone screens. And possibly tv screens. They are bendable and still produce the same display. They would replace the gorilla glass present now on most smart phones. Much lighter and plastic. Plus they can be used like moving sculptures, or a spherical screen, or any design for that matter.

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