Investors who are still watching Brillian (NASDAQ:BRLC), the rear-projection, high-definition television (HDTV) designer and developer that's had a rough late 2004, no doubt noticed the company's news release of yesterday. Its deal with JDS Uniphase (NASDAQ:JDSU) resembles something like a make-or-break development for the Tempe, Ariz.-based company.
Shares of Brillian rose nearly 10% yesterday on trading volume twice its recent average following the announcement that it sold "certain assets," which weren't detailed, to JDS Uniphase for $5.1 million in cash. For an unprofitable company with about $10 million in cash and equivalents as of Sept. 30 -- for the first nine months of this year, it countered operating losses and capital purchases with asset and share sales -- that's real money.
Perhaps as important to the long-term survival of Brillian's business, however, was the second part of Monday's announcement: The company licensed JDS Uniphase's technology for the production of "light engines," and it plans to set up a production line and start making them with JDS Uniphase's help.
Light engines are key components of high-definition televisions; a page on home audio/video retailer Crutchfield's website has some useful background on them. They're also a big reason why Brillian, previously part of Three-Five Systems (NYSE:TFS), has hit a rough patch lately. When JDS Uniphase couldn't get it the light engines it needed to get its TVs to market earlier this year, it lost a major retail partner in Sears (NYSE:S), and projected near-term revenues took a big hit.
Now Brillian will move the problem in house. If successful, Brillian believes it can get some TVs to market in the first quarter of 2005, and many more by Q2. This was management's projection in October -- a projection investors can now put some credence in. It's telling, however, that Brillian's market value is still less than one-third what it was when it expected significant TV-related revenues this fall and winter.
Companies in Brillian's position have little room for error and are punished harshly for their missteps.
Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story.
