Universal Display sells more, but also spends more

10 Aug 2006

Higher operating costs have wiped out sales growth for the OLED manufacturer.

Universal Display Corporation, which develops phosphorescent organic light-emitting diodes (OLEDs) for flat-panel displays, solid-state lighting and other applications, has posted a 40% year-on-year increase in sales for the first half of its fiscal year, but increasing operating costs have limited improvement at the bottom line.

Revenues for the six months to 30 June 2006 reached $6.3 m, up from $4.5 m for the same period in 2005. However, net loss for the period improved by just $400,000, changing from $8.2 m in the first half of 2005 to $7.8 m for the last six months. Indeed, second-quarter figures reveal that losses widened from $3.2 m in 2005 to $4.3 m for the last three months.

The company attributes the disappointing performance to the company's recent expansion, which has led to a big increase in operating costs. "We have moved from a 20,000 ft² facility to a 40,000 ft² facility, and we also have hired a number of key personnel for OLED research and development," commented Steve Abramson, the company's president and COO.

As a result, the amount of money spent on operating activities for the last six months reached $5.6 m, as compared with $2.0 m for the same period last year. Some of this money was taken from the company's cash reserves, which now stand at $47.8 m, down from almost $50 m at the beginning of the year.

Sidney Rosenblatt, the company's chief financial officer, refused to predict full-year results, saying that "revenues remain difficult to predict on a quarter-to-quarter basis". But he did reveal that income from government contracts would reach $4-4.5 m over the year, and that operating costs are unlikely increase any further.

• Universal Display has been awarded two new Small Business Innovation Research (SBIR) Phase I grants, each worth $100,000, from the US Department of Energy's Solid-State Lighting Program. The grants will fund the development of white OLED lighting technology using the company's phosphorescent OLED.

In the past three months, Universal Display has also won contracts worth $100,000 from the US Navy and $1.275 m from the US Army. The funding will be used to develop flexible OLEDs fabricated on metal foil.