The Dolcera Blog

Universal Display Corporation announced its financial results for the third quarter of 2011 in the past week. This is the first release of financial information that Universal Display Corporation has made since it signed a new agreement with Samsung Mobile Display. Dolcera presents an analysis of the announcement and the events surrounding it.

Universal Display Corporation reports its revenues in two segments: commercial revenue and developmental revenue. Commercial revenue relates to the incorporation of the company’s OLED technologies and materials into its customers’ commercial products, and includes commercial chemical revenue, royalty and license revenues, and commercialization assistance revenue. Developmental revenue related to OLED technology and material development and evaluation activities for which the company is paid, and includes contract research revenue, development chemicalrevenue and technology development revenue. Here, we mainly look at the commercial revenue of Universal Display Corporation.

Commercial revenue is reported in three parts: commercial chemical revenue, royalty revenue and license fees. In the results of third quarter of 2011, the revenue from royalty and license fees have been reported together. Unfortunately, since the past two years, Universal Display Corporation has been reporting only the change in revenues in each of these categories instead of the actual revenue figures. Some financial results announcements in the past have failed to provide quarterly information at all, instead providing information for the past 9 months or the past year as a whole.

Using historical financial results, we have reconstructed the commercial revenue earned by Universal Display Corporation in the three categories. The following table shows the quarterly commercial revenue by category in the past 5 years:

Source: Company filings

As expected, the revenues have shown a huge jump in the last quarter. Much of this can be attributed to the new agreement between Universal Display Corporation and Samsung Mobile Display. This agreement runs till 2017.  For the first time, Universal Display Corporation has explicitly mentioned the exact revenue it has received from Samsung Mobile Display from license fees. The company has received $3,246,315 from Samsung Mobile Display under its license agreement so far.

Apart from licensing fees, the agreement also increases the commercial chemical sales of Universal Display Corporation. Under the 2005 agreement, the company was the supplier of red PHOLED materials to Samsung Display Corporation. With the August 2011 agreement, Universal Display Corporation now supplies both red and green PHOLED materials to Samsung Display Corporation. Prior to August, Samsung Display Corporation sourced green PHOLED materials from Duksan, a Korea based company. There are no competing manufacturers of red and green PHOLED materials. The new agreement effectively doubles the per unit chemical sales of Universal Display Corporation.

In the following section we calculate the revenue that Universal Display Corporation receives from each display unit sold. All calculations have been performed using publically available data.

In the third quarter of 2010, 413.20 million mobile phone display units were shipped amounting to total revenue of $ 3,380 million. AMOLED display panels had a revenue share of 10.7% of the mobile display market. This results in the AMOLED mobile display panel revenue to be $ 361.66 million. The volume of AMOLED displays was 13.5 million units. In the AMOLED display market, Samsung Mobile Display had a market share of 98.3%. Thus, Samsung Mobile Display sold 13.27 million AMOLED display units and revenue from AMOLED displays units was $ 355.51 million. (Source: DisplaySearch)

Universal Display Corporation announces in all its filings that Samsung Mobile Display is the chief source for all of its commercial revenue. We consider that Samsung Mobile Display is solely responsible for all of Universal Display Corporation’s commercial revenue. The assumption is reasonable given that the period under study is the third quarter of 2010 when Samsung Mobile Display was the only major customer of Universal Display Corporation.

Universal Display Corporation’s royalty revenue for the fourth quarter of 2010 was $ 1,503,647 million. The royalty revenue is considered from the fourth quarter as royalty is paid by Samsung Mobile Display for goods sold in the previous quarter. As calculated earlier, Samsung Mobile Display’s third quarter 2010 revenue from sale of AMOLED display panels was $ 361.66 million. The royalty rate for the agreement between Universal Display Corporation and Samsung Mobile Display thus works out to be 0.423%.

The total number of AMOLED display units sold by Samsung Mobile Display in the third quarter of 2010 was 13.27 million. The royalty received by Universal Display Corporation for these units was $ 1,503,647 million. Thus, the royalty revenue per unit is $0.1133. The chemical sales revenue of Universal Display Corporation for the third quarter of 2010 was $1,642,600. Thus, the chemical sales revenue per unit is $0.1238. The key assumption in this case that the PHOLED material inventory levels of Samsung Mobile Display did not significantly change during the period.

The total revenue that Universal Display Corporation received from sale of each mobile display unit is $0.2371. It is to be noted that the period considered in this analysis is the third quarter of 2010 which is prior to the signing of the new agreement between Universal Display Corporation and Samsung Mobile Display. The August 2011 agreement doubles the chemical sales revenue per unit of AMOLED display panel sold for Universal Display Corporation. Thus, Universal Display Corporation receives $0.3609 for each AMOLED mobile display sold.

The above scrutiny only covers a part of an exhaustive industry analysis. For a detailed analysis of the subject matter, write to us at: info@dolcera.com

Written by: Kunal Krishna

Kunal is a Senior Business Research Analyst at Dolcera with expertise in cleantech and emerging technologies

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Red Hat Inc. and Novell Inc. are being sued by IP Innovation LLC. and Technology Licensing Corp. for patent infringement. The court filing claims that Novell and Red Hat infringed on the plaintiff’s patent for User Interface with Multiple Workspaces for Sharing Display System Objects as well as two other similar patents. This is the first patent infringement lawsuit involving Linux.

According to the lawsuit filed with the U.S. District Court for the Eastern District of Texas, Novell and Red Hat are accused of infringing on the patents by selling the Red Hat Linux system, the Novell SUSE Linux Enterprise Desktop, and the Novell SUSE Linux Enterprise Server. IP Innovation LLC. and Technology Licensing Corp. further further contend that the defendants “deliberately and willfully” infringed on the patents, stating that the defendants were previously notified of the infringement.

IP Innovation LLC. and Technology Licensing Corp. are seeking an injunction from the District Court plus damages including other relief that the court might find proper. Novell withheld comment until their attorneys could further review the court filing.
Red Hat Inc and Novell Inc are accused of violating three patents.

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Mumbai, May 18 The Council of Scientific and Industrial Research (CSIR) has received a United States patent on an innovative process to make sevelamer, a generic polymer that treats toxic excess of phosphate in the body caused by chronic renal failure.

The patent is a culmination of work done by CSIR’s constituent lab in Pune, the National Chemical Laboratory, on a mandate initially given by Mumbai-based drug company USV Ltd.

USV had acquired the patent rights from CSIR last year, following which it further undertook the prosecution of the application.

Dr Kulkarni’s team developed the alternative process that received the patent.

As per the agreement, USV had the first right to license the know-how and acquire the patent rights, and USV exercised this option.

USV had approached NCL in mid-2003 to develop an innovative process to manufacture the polymer. NCL developed the process and CSIR filed the patent application in India, and the US.

NCL’s scientists developed a cost-effective process to manufacture sevelamer, the phosphate-absorbing polymer. The process NCL reduces the manufacturing time and the process chemicals requirements and is easy to scale up. USV has made a one time payment, and no further milestone payments are involved, he said, citing confidentiality for not giving details.

This development is significant as a technologically novel process received a US patent and has been found commercially attractive by a pharma company.

The recent patent success comes against the backdrop of the Centre’s efforts to get more public-funded institutions to file patents and work with the industry to commercialise research efforts.

With 128 patents in 2006-2007, the CSIR accounts for about 47 per cent of the total US patents granted to Indians, excluding non-resident Indians and foreign assignees, said Mr R.K. Gupta, Head of CSIR’s IP Management Division.

Final patent

The final patent on the CSIR-developed innovative polymer will be issued by the US Patent Office in approximately four months, said Pharmaceutical Patent Attorneys, LLC, the New Jersey-based firm who prosecuted the patent for its Indian client.

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Apple Inc. is being sued by Klausner Technologies that has claimed that Apple iPhone has infringed on the Klausner patent for visual voice mail. Klausner is seeking $360 million in compensation and damages for its patent numbers US5572576 and US5283818 which basically describe a system that allows for the visual retrieval and sorting of voice mail by way of a display.

Patent #: US5572576
Title: Telephone answering device linking displayed data with recorded audio message
Assignee: Klausner Patent Technologies
Filind Date: March 15, 1994
Abstract: A telephone answering device (TAD) which includes a means of intelligently organizing voice messages, associated entered codes such as personal IDs and home telephone numbers, and information stored in the memory of the TAD. These codes or numbers are decoded by means of the caller entering DTMF signals into the telephone which are recognized, recorded and processed by the TAD. When processed with codes and personal information previously entered into the device’s memory, the TAD displays the identity of the callers for each message, thus providing a menu of choices, i.e., a list of callers. This enables the user to access messages in a selective manner based on the identity of the caller. The need to listen to the actual voice messages to determine the caller’s identity and the need to listen to the messages sequentially or chronologically is obviated, saving both time and effort. Additionally, because the voice message is also linked to pre-stored additional data in the data base, when hearing a message, one also can view relevant associated information, such as a fax number, etc., that might not have been left in the audio message but might be important. A remote access device is also provided that allows the user to retrieve and display the callers’ identities and select a message to be played back from a remote location.

Patent #: US5283818
Title: Telephone answering device linking displayed data with recorded audio message
Assignee: Klausner Patent Technologies
Filind Date: March 31, 1992
Abstract: A telephone answering device (TAD) which includes a means of intelligently organizing voice messages, associated entered codes such as personal IDs and home telephone numbers, and information stored in the memory of the TAD. These codes or numbers are decoded by means of the caller entering DTMF signals into the telephone which are recognized, recorded and processed by the TAD. When processed with codes and personal information previously entered into the device’s memory, the TAD displays the identity of the callers for each message, thus providing a menu of choices, i.e., a list of callers. This enables the user to access messages in a selective manner based on the identity of the caller. The need to listen to the actual voice messages to determine the caller’s identity and the need to listen to the messages sequentially or chronologically is obviated, saving both time and effort. Additionally, because the voice message is also linked to pre-stored additional data in the data base, when hearing a message, one also can view relevant associated information, such as a fax number, etc., that might not have been left in the audio message but might be important.

There are several other companies that have paid Klausner to license these technologies mentioned in these patents including AOL which is featuring the technology in its AOL Voicemail service. Vonage also pays for the use of this technology for its Voicemail Plus service. Thus far, Apple and AT&T have not made any comment on this issue.

Klausner is also filing against Comcast for their Digital Voice Mail, Cablevision for its Systems’ Optimum Voicemail, and Ebay’s Skype. The second suit filed in a different court on the same day seeks $300 in damages for patent infringement. Klausner Technologies is an avid patent seeker and was founded by Judah Klausner who invented and patented the PDA and electronic organizer. Klausner has been well known for its aggressive patent mongering.

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