Universal Display Corporation (NASDAQ:OLED) just announced second-quarter results, and the market isn't happy. After declining 3% in Thursday's regular session, shares of the OLED technologist, dropped another 5% in after-hours trading after it told investors revenue fell 9.4% year over year, to $58.1 million.

Based on generally accepted accounting principles, that translated to a surprise net loss of $11.8 million, or $0.25 per share. On an adjusted basis, however, Universal Display achieved net income of $19.4 million, or $0.41 per share. Unfortunately, analysts were more optimistic on both fronts, with consensus estimates calling for revenue of $63.3 million, and adjusted earnings of $0.45 per share.

Here's what happened
Universal Display's GAAP net loss reflects a one-time $33 million writedown primarily of existing host material, UDC says, due to a "customer's faster-than-expected reduction in demand for this material." Remember, as I pointed out in my earnings preview earlier this week, because Universal Display's patent portfolio primarily covers the phosphorescent OLED emitter materials market, its licensees are not obligated to purchase from UDC the complementary host materials required build their respective OLED products.

Similarly, recall that, three months ago, an expected decline in host sales -- namely from Samsung, which acquired OLED host producer Cheil Industries last year for that very purpose -- was responsible for a year-over-year drop in overall material sales in the first quarter, as well.

Universal Display CFO Sidney Rosenblatt elaborated:

During the [second] quarter, dynamic shifts in market strategies resulted in numerous new product introductions that utilized our new red and green emitters. At the same time, these shifts also negatively affected demand for established products that used our existing host material, which led a customer to significantly reduce its forecast for this host material. As a result, we have written-down relevant excess finished goods and work-in-process inventory. Looking forward, we anticipate a stronger second half of the year.

The good news
This quarter's big writedown was a direct consequence of next-generation products adopting Universal Display's latest and greatest emitters. And make no mistake: That's a great sign. As a result, however, older products that did use its host materials have been phased out more quickly than originally anticipated, accelerating the ongoing decline of Universal Display's host business.

More specifically, overall material sales fell 32% year over year during the quarter, to $24.3 million, primarily reflecting an $11.7 million decline in host material sales. Meanwhile, royalty and license fees increased 19.9% year over year, to $33.7 million, including one of the twice-per-year $30 million payments from Samsung. That was up from $25 million last year per the terms of Samsung's long-term license and material supply agreement with UDC.

If the remaining $3.7 million seems small, keep in mind that volume discounts were part of the reason Universal Display's second-largest customer, LG Display (NYSE:LPL), signed a similar contract earlier this year. But that should change soon enough: Rather than fixed installments, LG's contract specifically pays Universal Display running royalties on sales of licensed OLED products. And less than two weeks ago, LG reiterated plans to significantly ramp production of its cutting-edge OLED televisions later this year.

The light at the end of the tunnel
As Rosenblatt hinted in his comments above, Universal Display expects a stronger second half, and reiterated guidance for the year. Still, with the caveat that the OLED industry is "still at a stage where many variables can have a material impact on its growth," that guidance calls for 2015 revenue of roughly $200 million, with a downside range of 5% (to $190 million) and "upside potential" of 15% (to $230 million).

It's no mystery that the market hates being told to hurry up and wait. So I won't be surprised to see today's after-hours losses sustained through tomorrow. But considering Universal Display's long-term story remains firmly intact, I see no reason to part with my shares now.

Steve Symington owns shares of Universal Display. The Motley Fool recommends Universal Display. The Motley Fool owns 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. The Motley Fool has a disclosure policy.