Luxell Soars On Investor Optimism For Technology Patent
Following a March 1 patent filing by Luxell Technologies, the flat panel display maker sailed past its previous 52-week high. Buttressing investor optimism regarding the company's future, Luxell president and CEO Brian Kennedy promises that contract announcements are imminent - but with whom? The company has aspirations to form relationships with Asian OEMs, license its black layer process ubiquitously, and place its flat panel displays in consumer devices from wireless phones to automobiles.
Vancouver, BC, March 3 /SHfn/ -- The 30% gains accomplished Thursday by Luxell Technologies [V.LUX] followed the company's March 1 announcement that it would seek a life-long patent for its black layer technology for flat panel displays based on organic electroluminescent (OEL) technology. That may be a lot of syllables to swallow, but investors in this sector seemed insatiable on the heel of the LUX announcement. A substantial deal forged by a Luxell competitor has whetted appetites for similar signings that president and CEO Brian Kennedy promises are "imminent."
Kennedy said in a StockHouse interview that Luxell's "objective is to be like the Intel [INTC] inside. It's to make the black layer really available to anyone making an [organic electroluminescent] device." Luxell hopes to grow via licensing agreements for this technology, which the company believes will become a standard not unlike the prevalent Intel computer chips. The black layer improves the clarity and sharpness of the image display.
"The patent is crucial because, once awarded in the US, recognition of intellectual property rights in European, Canadian, and Japanese markets will quickly follow."
Luxell Technologies develops, makes, and markets flat panel displays utilizing both the burgeoning organic electroluminescent (OEL) technology and inorganic electroluminescent (EL) technology. With a patent already in hand for the process which integrates a black layer in its more established non-organic EL displays, the company feels it will have an additional leg up on its competition once it is also granted recognition for its black layer technology for OEL screens. The patent is crucial because, once awarded in the US, recognition of intellectual property rights in European, Canadian, and Japanese markets will quickly follow.
Both types of display are lauded for a variety of reasons. Unlike Liquid Crystal Display (LCD) screens, the Luxell screens are solid state and contain no liquid or gas. They function in a wide temperature range, and are recognized as rugged, reliable, and highly shock and vibration proof. Notable for their very thin structure, Luxell's top officer champions the screens' wide viewing angles and fast response times; Kennedy also indicates that the firm's products are known for clarity and contrast.
The inorganic device utilizes phosphor and high voltage powered by DMOS technology. The higher voltage requires a consequently higher priced electronics assembly. These EL screens have a monochromatic display, but are renowned for their reliability and long life.
Organic phosphor screens are powered by lower voltage CMOS technology, and require a substantially less expensive electronic package, which is also used in the manufacture of LCD screens. The OEL screens are bright and full colour capable, though they do register a shorter life than their inorganic counterparts. With a threshold of 10,000 hours of usage, Kennedy points out that OEL displays remain ideal for hand held wireless devices such as cell phones and Palm's [PALM] PDAs, automobiles, civil aviation, and some military applications.
In September, 1999, the company formed a key relationship with Universal Display [PANL]. The company is aligned with laboratories at Princeton and the University of Southern California. According to Kennedy, the relationship placed LUX into the organic EL business immediately. His firm obtained the license necessary to make organic EL displays - available only from key license holders Kodak [EK], Universal Display, or the English firm Cambridge Display. Additionally, Luxell has utilized PANL's facilities for prototyping and sampling during construction of its own manufacturing site.
At the moment, the firm produces and ships inorganic EL screens from its base in Mississauga. LUX expects that demand for the organic EL displays will be a business that is five- or ten-fold bigger, and is expanding its manufacturing space. In addition, says Kennedy, "the strategy is to go to off-shore original equipment manufacturing (OEM) relationships," a plan the company is actively pursuing.
A recently closed private placement managed by Canaccord Capital leaves Luxell's coffers $9 million richer. The company will use the funds in research efforts for organic displays and for product marketing.
"I think you'll see a real hockey stick growth in this technology."
The CEO sees Luxell as a producer of enabling technologies. The organic display sector is a high growth market that is likely to grow from a current value of US$4 million to more than US$1 billion in less than four years. Though the sector is currently limited by capacity, six major fabrication plants will come on stream in Taiwan within a few months. Kennedy says, " I think you'll see a real hockey stick growth in this technology."
Kennedy indicates that the black layer technology is the element differentiating Luxell flat panel displays from competitors such as heavyweight Japanese electronics firms, Pioneer [PIO] and Sharp. He acknowledges that Pioneer is already making an organic display, though he suggests customers would choose the Luxell screen if both displays were viewed side by side.
A Canadian competitor, Westaim [T.WED], announced March 1 that its flat panel unit, iFire Technology, had reached an agreement with TDK Corp of Japan to commercialize WED displays for the television industry. However, this contract means that the company will not be in commercial production until 2003.
"Luxell is pondering its own jump to a higher profile exchange, with Kennedy suggesting that the company could move to the TSE or to a US exchange."
Westaim is a Calgary-based technology incubator, which also nurtures a biomedical subsidiary and a unit that specializes in cooking surface engineering. The stock is trading near its 52-week high of $20.50 on the TSE, after making a January leap from the CDNX. Investors continued to buy into the issue, despite net losses of $0.21 for fiscal year 1999 reported on February 17. Luxell is pondering its own jump to a higher profile exchange, with Kennedy suggesting that the company could move to the TSE or to a US exchange.
Luxell already boasts an impressive customer roster, including high-end avionics makers Raytheon [RTNA], Lockheed Martin [LMT], and Marconi. That list, says Kennedy, comprises "household names that are very discriminating in the technology they choose and who the vendor is. So, that's our credibility point, our flag in the ground." From displays utilized in the aviation industry, the company's chief executive believes it's a "natural fit" to next pursue car manufacturers. Displays used in the two industries require similar tolerances in temperature range, shock and vibration profiles.
Luxell reported 1999 fiscal year end figures for the period ending August 31, 1999. Sales of $2,264,976 showed a 65% improvement over the prior year's total of $1,371,553, while losses narrowed 36% to $1,622,789. The company posted a net loss per share of eight cents. Q1 2000 results were released at the end of January, showing a net loss of five cents per share. Sales declined almost 4% in comparison with the same quarter in the previous year.
The company has seen some production delays as it proceeds with the installation of new equipment for the manufacture of organic EL displays, and has scaled down its sales projections for the year. Kennedy says LUX now expects to bring in between $5 and $6 million dollars. He adds, "we're not losing business because of [the delays]. It has just been delayed a couple of quarters in terms of shipments. The expansion program is going forward."
The company will exhibit its organic EL screens at the Society for Information Show in Long Beach in May - giving many more customers their first glimpse of these devices.
stockhouse.ca
Someday I'll figure out how to buy this stock. I gather it trades on the Vancouver exchanger under the symbol LUX.
Jack |
