The common lightbulb is looking more obsolete every day. Even in the middle of a massive market upheaval, Cree (NASDAQ:CREE) can pull out a rambunctious quarter with a business model that hopes to replace most incandescent bulbs in the world someday.

The light-emitting diode (LED) technologist reported a net profit of $0.07 per share on $140.4 million of sales, a 24% revenue boost over last year's first quarter, but about half the bottom-line income. The year-ago results included a decidedly one-time gain of $0.13 per share, though, as management cashed in its investment in tiny Color Kinetics, now owned by Philips Electronics (NYSE:PHG). The gross margin inflated from 31% last year to 35% now, and the company made a small operating profit compared to a small year-ago loss.

So this little train is clearly rolling in the right direction. LEDs are power-efficient and produce a more controlled color than old-style bulbs, and companies like Cree, Philips Lumileds, and Siemens (NYSE:SI) division Osram Opto Semiconductors work hard to make LED lights brighter and more efficent. You'll find those distinctive little bulbs in everything from flashlights and replacement light bulbs to brightly colored holiday lights and laptop screens. In fact, next to the solid-state drives we're starting to see from the likes of Intel (NASDAQ:INTC) and Samsung, those LED backlights may be the best thing that's happened to the laptop in ages. Apple (NASDAQ:AAPL) proudly uses LED lights as a selling point for its Macbook systems.

Now, there's plenty of competition in this space. Lightbulb makers like Osram, General Electric (NYSE:GE), and Philips won't go gentle into that good night, even as most of them are pushing their own LED solutions. And then we have organic LED panels, or OLEDs, backed by researchers like Universal Display (NASDAQ:PANL) and Sumitomo Chemical's Cambridge Display unit. That technology promises to cover entire walls in light-emitting wallpaper, among other things.

The good news for Cree and its rivals is that we're talking about a huge market. There are 4 billion light bulbs in the U.S. alone, and old-style bulbs will soon be illegal in markets like Canada and Australia. It won't take a big slice of that sort of market to make a massive difference to Cree's $500 million annual sales run-rate.

Turn out the light when you leave the room. Then throw away the bulb and get a better technology. Your portfolio could use the same treatment.

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Fool contributor Anders Bylund owns shares in Universal Display and he loves his twin-LED flashlight; he holds no other position in any of the other companies discussed here. You can check out Anders' holdings or a concise bio. The Motley Fool is investors writing for investors.