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Black Diamond, Inc. Message Board

carne8ielaker 87 posts  |  Last Activity: 16 hours ago Member since: Jul 24, 2012
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  • carne8ielaker carne8ielaker Jul 10, 2014 2:11 PM Flag

    I wonder if people know that Ron publishes OLED-INFO...so he is not some fresh college graduate trying to make a name for himself making outrageous predictions; this is a guy who has forgotten more about the OLED industry than the rest of us know...

  • carne8ielaker by carne8ielaker May 14, 2014 2:22 PM Flag

    In my 25+ years of managing money I have come to embrace a simple rule: "If management tries to argue with shorts publically...the shorts are probably correct." UDC management just released Q1 earnings, and they beat estimates on both revenue and earnings AND effectively raised guidance for the whole of 2014. Historically, the company has never adjusted guidance after only 1 quarter, and yet this year they did. But if you listen carefully, they merely claimed that they would be at the upper end of previous guidance...leaving them room to FURTHER raise guidance after the current quarter. So my point here is that management is giving us a lot of information/data and it is up to all investors to assess the importance of that info. If you want to short the stock; fine, and you might be able to make money in the short term. But I believe that the ultimate "catalyst" will come when LG signs an agreement that runs way past 2017. This will knock the 2 remaining legs from any short thesis that is still out there. The first being that LG doesn't need an agreement with UDC, and the 2nd that post 2017 there will be no ability to collect royalty/license payments. Again if you listen to what UDC management has told us, they have basically said that the patents on the emitter products SMD is buying TODAY don't run out until 2020...and then of course, within a year or two, the new emitter products that SMD will be using "tomorrow" will have patent protection even further out. Given the operating leverage of this company, it will not take a dramatic increase in production capacity by SMD or LG or any of the lighting guys to significantly boost UDCs bottom line...and if UDC can earn north of $2 by the end of 2015 (with an LG long term contract in hand) do you think the stock will still be south of $50? I don't think so...

  • Reply to

    30 YARD LINE

    by dca1125 Jun 11, 2014 2:50 PM
    carne8ielaker carne8ielaker Jun 11, 2014 3:31 PM Flag

    as nice as it feels for the stock to be going up, we also need to remember that the stock was at about at these levels after having fallen from $35 during the "sell everything in April" experience....then of course there was the fear that Chiel was going to steal all of the host biz; then the fear (misplaced and incorrect) that Sony was exiting the OLED TV biz (misplaced in that they were never in anyone's estimates and incorrect in that they have said emphatically that they continue to evaluate OLEDs) and then the fear that the Q1 results would bomb...so what have we learned since then? That while Cheil might be able to garner some host business, it isn't happening yet, and will probably only happen during a product transistion. We learned that UDC was selling next generation emitters during Q1 that not only have higher prices but have patent protection THROUGH 2029!!! We learned that Samsung is expanding their smartphone/tablet dispay capabilities while LG is on track to start ramping OLED TVs in H2. We learned about some more innovations at SID, and we learned that the company has a $50 million share repurchase authorization. Oh and during the kickass earnings announcement not only did the company have great earnings, but (for the first time after only the first quarter) the company guided revenues to the top end of previous guidance, and will also have ample opportunity to guide further after Q2.

    So while it is always difficult to say what the "normal" price should have been prior to all of these positive announcements, I don't think anyone would say that $23 was the "normal" and we have now gotten 25%+ from there....if $35 was indeed where the stock should have been, and these past announcement are worth 25%, then the question is: who wants to kick the ball over the 45 yard line?

  • carne8ielaker by carne8ielaker May 14, 2014 4:28 PM Flag

    As I have mentioned before on these boards, the LG agreement is important for 2 reasons: First it will show that LG needs UDC, and that LG is ready to ramp up production and secondly, the LENGTH of the agreement will prove that there is no patent cliff in 2017. UDC management has stated that the SMD agreement expires in 2017 because that was 5 years after the agreement was signed...it had nothing to do with patent life. So the question now is WHAT IS THE HOLDUP?

    Remember, LG may have an idea how many materials they are going to use when they start mass production, but right now it would be just a guess...and they need to be accurate before signing a LT deal with UDC. After all, if they commit to buy X grams of product, they will get Y price/gram...but if they commit to buying 3X of product, then the price that UDC will accept will be less than Y. Notice that I said COMMIT...So while LG will not go into production paying the current retail price (they want wholesale) UDC is not going to give them a discounted price without a minimum purchase requirement. Then as it pertains to a royalty or a license payment; if they have committed to 3X of product, then UDC might settle for a smaller royalty % than if LG only commits to X grams of product. Same goes if the parties agree to go the license route (like the SMD deal); UDC will accept what might be a smaller percentage number (given panel pricing assumptions) that translates into a large annual fee if LG is going to buy boatfuls of emitters, but if production is going to be smaller, LG is not going to want to fork over $10s of millions for naught.

    One could argue that LG is painting themselves into a corner by NOT signing something today, since it they wait until production has already ramped, UDCs negotiating leverage will have improved tremendously. But one has to assume that UDC does not want a cantankerous relationship with one of their 2 largest clients, so odds are that UDC will accept a fair agreement..tbc

  • carne8ielaker carne8ielaker Jun 27, 2014 2:53 PM Flag

    short sighted...if you think that the best you are going to get is $56 you are in the wrong stock...a number of years ago I owned Marvel Comics...and they sold to Disney...got a good price, but now one Iron Man movie grosses about what DIS paid...when you have a unique asset that can grow for a long period of time, run by dedicated and experienced managers you want to own it for a long long time...

  • carne8ielaker by carne8ielaker Jul 3, 2014 11:57 AM Flag

    A few months ago I pulled my iPad out of my briefcase, and it was underneath a bunch of other stuff...when I finally got it out, I must have flexed it too much and the screen looked like a bullet had hit it...but it continued to work so I didn't replace it. So NOW I have a good excuse to buy a 10 inch TabS which I just did, and it will be delivered on Monday...so I will report in on my impressions (although I am clearly biased to like it considering my OLED holdings)

    The reason I explained WHY I needed a new tablet is also to point out that when "flexible" screens become the norm (and that can only happen with an OLED screen) they will become a whole lot more durable, and durability (along with brighter colors, thinner design, better battery life etc.) will become another selling point for OLED screens on anything portable...

  • Reply to

    calm management is good management

    by carne8ielaker May 14, 2014 2:22 PM
    carne8ielaker carne8ielaker May 14, 2014 3:43 PM Flag

    thanx for the thanx...sometimes one never knows whether it is worth taking the time to provide input on these boards given the vitriol that some people spew, so I am glad that I at least helped you. If I recall correctly, you have been long UDC since 99. While that is about 10 years longer than me, you have clearly seen the ups and downs of this stock, but what I am sure is so frustrating, is that NOW there is light at the end of the tunnel! Again, given how long I have been managing money, I believe that the most challenging time to hold a stock is when they actually start making money...when it is a "concept" stock then no one really knows how to value it; but when you can actually put a P/E on it, then it becomes more of a challenge. Which gets me back to the importance of the length of an eventual deal with LG...right now, there is nothing to "prove" that there will not be a patent cliff in 2017...management can tell us there won't be, but that is just their (in the view of the shorts, biased) view. So if the bears truly believe that revenue will drop off a cliff in 2018, then no amount of teeth gnashing will convince them otherwise...the ONLY thing that will convince them is when a real company (like LG) commits to deal that treats 2015, 16, 17,18 and 19 all the same (and hopefully a chunk of this year as well) So keep the faith, keep your seatbelt fastened, and after we get the LG agreement we will hear the howls of the shorts getting their faces ripped off...

  • Reply to

    REPORT FROM THE ANNUAL SHAREHOLDER'S MEETING

    by dca1125 Jun 19, 2014 9:09 PM
    carne8ielaker carne8ielaker Jun 20, 2014 3:15 PM Flag

    I made a note to myself when I heard Steve talking about "putting arrows" on the chart, but then "legal" wouldn't let him...if you go back to ANY quarterly earnings report and/or scripted opening statements on conference calls you will find that as relaxed and conversational Steve comes across, he has parsed every word in the script. In other words, if Steve talks about excitement with new emitters, then before you know it, they are selling new emitters...if he talks about lighting, then guess what, I think we will see revs from lighting before the year is out...SOOoo I think that his "arrows" comment was not a throw away line, but rather a "scripted" way to communicate what they think the future would look like...after all, he could have very easily left out the "arrows" comment...but he did NOT!

    So YES bigdog, those of us at the meeting could feel the confidence both during the presentation and when we chatted up the "staff"...and unfortunately that body language didn't translate very well onto the audio webcast, and also it IS unfortunate that those on the web not only did not get to see the video, but also did not get to see the slide deck...the latter being inexcusable from an IR perspective.

  • Reply to

    Seems obvious to me...

    by jmuronis Jul 1, 2014 10:06 AM
    carne8ielaker carne8ielaker Jul 1, 2014 11:55 AM Flag

    DCA is one of the most thoughtful people on this board...as to your question, the purpose of a share buyback is simply the allocation of capital (at least the good ones are). UDC has over $275 million in cash on their B/S and will be generating cash from now on. They see the fundamental progress the company is making, and they see the share price depressed. So they are allocating capital to purchase an undervalued asset. Buying shares does not "make the share price go up" but rather it improves EPS by shrinking the outstanding shares. If the fundamentals continue to improve, then the buyback will have been smart...if fundamentals deteriorate (see ADT last year) then what ever boost to demand the buyback creates will get washed away by the fundamentals. As a large long, I believe the fundamentals are now on a hockey stick improvement slope.

  • Reply to

    Stock Buy Back

    by serfbum1 Jul 15, 2014 1:57 PM
    carne8ielaker carne8ielaker Jul 16, 2014 10:54 AM Flag

    All the pieces are lining up for a great Q2 and upping of guidance. There is no reason for the company to come out and "refute" anything; once you get into that game then the next time when you do NOT refute, then people will read into the fact that you did NOT say anything. If the stock was falling because someone was out saying that the Q was bad, and it was indeed bad.....then SEC regs would require that they say something. Finally, we (the shareholders/company) have a stock repurchase program in place, and as was cited above, these plans have self imposed "rules" as to what price, volume % of volume etc. guiding when the shares can be repurchased. So for me, banking on the fact that the Q will be great, I would rather learn that the company had repurchased say $38 million worth of stock at an avg price of say $28.97 than have them try and refute the bozo article on SA. We have to remember, the MAJOR short leg that is left is the (unfounded) fear of a patent cliff, and IMHO the only way to rebut that is to announce a LT agreement w LG that runs through 2020 or so. If you are a short that believes that there WILL be no such agreement, you want to be shorting more stock AFTER the stock has had a strong run. WHile the current price action is frustrating, I firmly believe that it has nothing to do with the fundamentals, and the stock will perform quite nicely both after the Q2 report comes out, and after we get the agreement from LG.

  • carne8ielaker carne8ielaker May 12, 2014 1:52 PM Flag

    geez...did anyone believe that Sony was going to be a player here?! Of course not...and there is not one estimate out there that has ANY production from Sony in it...its all Samsung, and LG and in '15 we will start to see some lighting...Sony needs to have a 4K TV to sell, and they couldn't get it done with an OLED version in time....almost no different than what Samsung is doing...but that doesn't mean that LG won't have one...

  • carne8ielaker carne8ielaker Jun 27, 2014 3:10 PM Flag

    not from these levels....you want the stock to run to $75 and THEN have someone put a 50% premium on it...sure as heck not $56!

  • Reply to

    Street Authority Article is Absurd

    by dca1125 Jul 10, 2014 12:17 PM
    carne8ielaker carne8ielaker Jul 10, 2014 1:39 PM Flag

    I don't think he is "totally wrong"...he misses a few key things and doesn't give any catalysts (ie a long term agreement with LG) but in general it is a positive article...would you rather have a "short driven" totally incorrect article written? :)

  • carne8ielaker carne8ielaker Jun 5, 2014 1:59 PM Flag

    from an accounting perspective, the shares become "treasury shares" which is effectively like retiring them. Shareholders will always have a say in the number of shares that are used as employment incentives; which is a separate discussion. Now of course there have been MANY companies over the years that have announced with great fanfare their share repurchase plans, and when one inspected more closely, one found out that the repurchased shares were only offsetting option dilution that had previously been approved. In the case of UDC, it is clear that this is the best kind of share repurchase...one done because mgt and the board think that the shares are incredibly cheap!

  • Reply to

    Morning Report from JG

    by dca1125 May 13, 2014 9:03 AM
    carne8ielaker carne8ielaker May 13, 2014 10:20 AM Flag

    yes his headline was: Universal Display (OLED) - Sony Exiting OLED TV Business; No Revenue Impact; Reit Overweight; PT $47
    He details how little revenue is going into Japan (the 10Q highlights geographic diversity) other than the green host material that is mixed there before ending up at Samsung, and the rest is coming from Japanese lighting projects...so he is backing up his "no impact" opinion with facts.
    He then points out that "as recently as yesterday, additional OLED panel production programs have been put into play."
    Thanks Andy for highlighting the facts.

  • carne8ielaker by carne8ielaker Jun 5, 2014 1:54 PM Flag

    I am always amazed at how people misconstrue the term "creating shareholder value". In the final analysis the ONLY way to create long term shareholder value is to generate cash; and you generate cash from products or services that you sell (at a profit); and then you create additional value by how you "invest" the cash that you generate. Whether the stock is reacting accordingly, the only way for UDC management to "create value" for us as shareholders is to create product (including IP) that they can sell. I am of the firm belief that the only leg for a bear to stand on with this stock is the belief that 2018 will bring about a revenue cliff; and the only way for the company to prove that there is no such cliff is to sign a long term agreement with LG that runs well through that cliff. Yesterday's announcement of a $50 million share repurchase will only "create" shareholder value if in the future the company earns, say $3/share, and we can look back and marvel at how they were able to buy stock for less than 10 times earnings. As a long holder of the stock, it is gratifying to see the stock up strongly today, but I will be more gratified (and management will create more "value" for me) when we hear about a long term contract with LG; or when we hear that there is a commercially viable dark blue emitter...since it is those announcements that will truly create value for this shareholder. (It should be noted that I came out on this board a few weeks ago arguing that mgt should buy back $50 million worth of stock...between the $25 million due from SMD in a few weeks, and the earnings coming through this quarter, net cash will stay fairly static, even after executing the $50 million buyback...but again, this is only creating "value" if future earnings make this purchase look dirt cheap!)

  • Reply to

    Why The Rise Chapter 3

    by dave2207z May 1, 2014 6:55 PM
    carne8ielaker carne8ielaker May 2, 2014 8:10 AM Flag

    As you know, the company has filed a shelf offering...so there WILL be equity coming (and maybe some debt and maybe some converts)..the total amount will be somewhere between $150 and $200 million (number not really important for this discussion) So if you are short, you are hoping that the size will be large, the demand will be weak, and therefore the discount to prior nights close (when they price the deal) will be significant. SInce there are rules against shorting into a deal (you cant short today if a deal is coming tonight...I think the cut-off is 4 days, but don't hold me to that) you have to stay short now. So the real question the shorts have to ask themselves, especially given the recent strength of the stock, is will the deal be large enough to insure that they can cover on that deal...because if it is on the lower end of expectation AND the price is higher than today AND the demand is high (people wanting to get long with the equity raise behind them) then we will see a strong POP on the deal...so if you are short, you are hoping that the deal is HUGE, the stock will weaken into the deal and a discount will have to be slapped on to incent demand...then you can cover your entire position at a profit...ME I am long, and looking to get longer into the deal! (and BTW you wee spot on re the quarter...everything is "fine")

  • Reply to

    Samsung Earnings

    by abqnorseman Jul 8, 2014 9:32 AM
    carne8ielaker carne8ielaker Jul 8, 2014 9:55 AM Flag

    the things that jumped out at me with regard to UDC is that while high end smart phone sales held up fairly well (ie good for OLED) the lower end (those without OLED screens) we weak, with sales going to cheaper competitors. Additionally tablet sales were weak. Bit of course that is before the release of the TabS, which we all know is being launched with a strong marketing push. My takeaway from the Samsung results is that the company needs to keep pushing the concept that AMOLED is far superior to LCD screens, since AMOLED is one of the differentiating features for Samsung products...since without such a differentiating feature, Samsung risks getting commoditized.

  • Reply to

    Analyst multiples? huh?

    by investmenttankerblogspot Jul 2, 2014 8:02 PM
    carne8ielaker carne8ielaker Jul 3, 2014 11:18 AM Flag

    tanker is correct in that UDC will make more $ without a LT contract in place, and if UDC were a private company, that might be the strategy to pursue. Thankfully for us, however, UDC is a public company, and in order to be accorded a high multiple on impressive financials a LT agreement is key (ie agree with Troper). We also need to remember that the market likes smooth and abhors lumpy...so the smoother the revenue stream can become (all things being equal) the less likely you will get a "negative surprise" and then the multiple will be better as well. While most people might not realize, UDC would have been hurting big time in 2012 had they not had the kind of deal they actually struck with SMD. The market had hoped that UDC would have a materials and royalty arrangement, but instead UDC ended up with a materials (with minimum purchase requirements) and a license agreement, with the difference of course being that a royalty pays on units actually shipped/sold while the license was/is paid regardless of production. In Q3 of '12 when SMD pushed out production and material sales disappointed (and perhaps held up by min purchase requirements) the stock was slammed, but it would have been a lot bloodier had there been a royalty rather than a license payment coming.

    Looking at it a bit differently, assume that WITH a LT agreement LG will represent $1 of 2015 EPS earnings whereas WITHOUT a LT agreement, LG might represent $1.20 of 2015 EPS. I would argue that the market will assign a 30+ multiple with an agreement in place while only assigning a 20+ multiple without one. For the sake of easy math, assume that other customers (including Samsung) represent $1.50 of EPS...so UDC can earn $2.50 WITH and agreement or $2.70 WITHOUT an agreement....if the stock will get a 30 x multiple WITH an agreement, OLED goes to $75 (30x$2.50) but if there is NO agreement and we only get a 20x multiple, then the stock will only go to $54. I'll take $75 over $54.

  • carne8ielaker carne8ielaker Jun 30, 2014 2:21 PM Flag

    POS is right...OLED is up over 22% in June while the market is up 2%...so listen closely to the guy who claims that there is only a 4% short position in the stock...he is just trying to give you "solid, legitimate, truly useful investing advice"

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