Motley Fool Rule Breakers' primary play in the world of small-screen television reported earnings last week and -- well, what can you say about Universal Display (Nasdaq: PANL)?
Q3 losses swelled in comparison to last year's third quarter, going from negative $0.08 to negative $0.15. Management explained the greater losses as partly a function of lower interest income, “due to reduced rates of return of investments," but also because the company took in around $450,000 less revenue this year than last.
Hardly the kind of news you want to hear from a putative "Rule Breaker," I know. But the news wasn't all bad. For one thing, the prospects for OLED-based television (and other uses) are getting brighter by the day.
UD tells us that Samsung Global Display just demonstrated a pair of OLED TVs, 14-inch and 31-inch in screen-size. LG Display (NYSE: LPL) has a 19-incher in the works -- in each case, improvements over Sony's (NYSE: SNE) original 11-inch screen. AU Optronics (NYSE: AUO) is restarting its AMOLED program, and a tech licensing agreement with Kyocera (NYSE: KYO) could kick into higher gear before year's end. Plus, the U.S. Department of Energy is interested in using white OLEDs in lighting -- and UD thinks this could evolve into a whole new revenue stream for it.
So, a whole lot of promises?
Basically, yeah, that's all UD gave us last week, and the stock is predictably falling on the news. But all is not lost. Sure, we're primarily dining on pie-in-the-sky promises of future sales, and watching current sales lag (down 15% year over year). But we can take some comfort in the fact that while UD is going nowhere fast, neither is it going away anytime soon.
Thanks to a cash infusion of $2.2 million in "fees from customers for licenses, technical assistance and joint development work," operating cash flow use dropped precipitously in the third quarter.
Foolish takeaway
With UD spending $2.7 million free cash flow per quarter on average year to date, and $79 million in the bank, it still has time to fulfill the promise that the Fool's Rule Breakers team sees. However, it will have to eventually turnaround its negative free cash flow to please investors.
For further Foolishness on Universal Display, read:
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