UDC just initiated its own downgrade. The stock has been sliding for some time now on "no news". I sold @ $40.80 after it slid 4 points on "no news". Analysts positions were all over the board as to stock price and UDC has been doing a great job of "missing" to the downside. Are you looking for confirmation that UDC can still make it to $65+ and not shrink into the 20's where it is now? Goldman will likely help you with that.
Based on earlier revenue estimates across analysts
to get to 80-82 they have to replace these:
and yes that will require a lot of adjusting
Which quite frankly might beg a couple questions...
A) did I have the most up to date reports going into Q3/CC not likely and maybe the numbers I used above were outdated and already reduced... SORRY.
B) Why were analysts caught off guard?... do only Korean analysts have access to SMD's capacity ramp up data? Is there no communication between SMD and the analysts of UDC that would allow them to reduce their estimates before the Q3 report... did they have the data but refuse to act on it until UDC officially reduced guidance...Do Korean analysts even have access to SMD about oled manufacturing capacity? Is everyone in the dark except UDC/SMD?
C) why didn't UDC notify the public earlier that capacity growth at SMD was invalidating their yearly guidance... and prevent a "negative surprise" at Q3E/CC and instead manage the expectations ahead of the Q? Is waiting for the Q3 announcement really the best time to handle that? I would argue heck no... you don't need negative surprises stuck on your Bloomberg screens forever.. you guide the analysts and investors pronto and keep the surprise off the books so to speak by lowering expectations ahead of time and then over doing the lowering and end up with a beat on lowered expectations. Have they learning nothing from Steve Jobs and managing investor expectations at Apple?
that said I know the management keeps looking at the long term story and ignores these shorter term issues but really they could use a few lessons in managing short term investor expectations 101.
My understanding is that green is delayed and Samsung found another supplier of host materials.
So, what's left - red emitter supply and no royalties this quarter. Of course, things will be better Q4 and 2013, but I have problem with company management - they should issue a warning much earlier. I don't believe that they learned in the last moment.
What is your opinion now of the deal the UDC got from SMD? It would seem that if SMD had been planning for this level of GSIII success, there may have been more upside in the deal with UDC than UDC ended up getting. Also, if there are other sources for materials, shouldn't UDC be pushing for more of a royalty based agreement from LG and others? It is difficult for me to fathom that UDC may have been talked into taking the minimum materials terms from SMD in lieu of a royalty if other material sources would be readily available. Also, why wouldn't an alternate material source need to license the technology from UDC if the material sales were for a protected use? Thanks
sorry sidney. even more troubling issues raised. there really is no minimum purchase ammount. if they do not meet minimum, it appears they can just keep delaying purchases into later years. no guidance of royalty fee payment ?increase or decrease next year. management breached their fiduciary respons to advise early when previous guidance so far off. there will be successful legal actions against them. also no mention of blue. obviously adding green was no great benefit to samsung, since they have not done it yet. if there is no problem with the process then i would conclude that the cost benefit ratio is probably not beneficial to them. oh yeah 500 tvs instead of 50000 tvs. #$%$? my advise sidney is dont trust this management.
Regarding C... my guess is that SMD is working VERY hard on gearing up Gen 8 oled production and UDC was asked to wait as long as possible before concluding there was a delay in the production ramp.. I suspect SMD asked them to delay announcing a capacity ramp delay for competitive reasons with LG. There is a huge game of chicken being played between SMD and LG regarding their true status of 8 gen production and UDC is somewhat caught in the middle leaving investors and analysts blindsided. Perhaps they should have set aside their big game of chicken and just be more transparent...but with only 1 customer currently UDC is likely at their mercy when timing the discussion of SMD's capacity ramp delays.