Samsung addresses OLED while Canaccord finds Universal Display’s Samsung claim “unbelievable.”

Monday, December 02, 2013.  This morning Canaccord issues a research report on Universal Display Corporation (“UDC:” NASDAQ: OLED) addressing the SEC’s inquiry into UDC’s accounting of its Samsung contract revenue.  The report finds UDC’s representations to investors “that Samsung is stuck” with in its supply and patent licensing contract unbelievable and inconclusive.  UDC has claimed that Article 4.2 of its contract with Samsung prevents it from terminating its agreement as a result of the invalidation of its all its claims contained in its only patent family known to relate to the use of organometallics in an OLED.

Irrespective of a near term, if not automatic, termination by Samsung, Canaccard found that UDC’s “fundamental longer term story is broken.”  Canaccord determined that the EPO’s invalidation of UDC’s EPO 238 “will [irrespective of a Samsung termination] limit the ability of UDC to sign favorable commercial agreements.”  In any regard, Canaccard’s investment research report notes the anticipated “drastic reduction in [UDC’s]earnings power post-2017.”

Meanwhile, Dr. Kinam Kim, Chief Executive Officer of Samsung Display gave a presentation earlier this morning at the Nomura Investment Forum in Tokyo, Japan.

Dr. Kim shed light on UDC’s mysterious reporting of an irregular increase in sales of green materials to Samsung, which was not anticipated by UDC’s analysts and will cut into any obligation Samsung had to UDC.

Dr. Kim’s presentation makes UDC’s irrelevance to its OLED business and success abundantly clear.  Dr. Kim focused on Samsung Display having the “world’s largest patent portfolio in AMOLED and flexible displays” and the fact that this OLED patent portfolio is rapidly increasing.  Dr. Kim pointed to the fact that Samsung “owns over 9,000 [OLED} patents” and has dramatically increased this number in the past 7 years. Meanwhile, UDC relies on work done by others in college labs for the government in the 1990s that has been found as a matter of fact and law not meet the most primary standards of an invention. 

Of equal to if not greater importance to UDC shareholders,  Dr. Kim focused on Samsung’s self-reliance and focus on cutting cost.

Specially, Dr. Kim stated that Samsung developed its RGB technology by itself and focused on its investment in internal R&D infrastructure.

Posted in Universal Display Corporation

Manuel Asensio doesn’t bet often. But when he does, it’s wise to pay attention.

Paul Kaihla
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