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Cree, Ledvance Sign Cross Licensing Deal on LED Technology
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Shares of Cree, Inc. have been underperforming the Zacks Semiconductor – Discretes industry over the last one year. While the industry gained 5.8%, the stock declined 8.6% over the same time frame.
The underperformance of the stock could be due to stiff competition in the consumer lighting segment. However, growing demand for LED products, recovery in utilization rates and continued cost cutting measures from the company’s end are expected to help the stock rebound in the rest of 2017.
The company recently announced that it has inked a cross license agreement with Ledvance, a leading manufacturer of innovative lighting products. As per the terms of the agreement, Cree will not only receive the ongoing royalty fees from Ledvance but will also gain the license to Ledvance’s patent portfolio without having to pay any royalty fees to the latter.
In return, Ledvance will receive a license pertaining to Cree’s portfolio of patents related to LED luminaires and LED light bulbs.
Notably, the licensed patents discuss the various aspects of manufacturing an LED light that involves the application of optics, LED power and control, heat management, light color, LED light efficiency and uniformity.
However, certain patents involving Cree’s SmartCast (a networked lighting technology) and TrueWhite (a color mixing technology) were excluded from the licensing rights.
What it Means for Cree?
As per a U.S. Department of Energy report, LED lighting is estimated to capture 84% market share in terms of lumen-hour sales with respect to the general illumination market by the year 2030, resulting in savings of over $26 billion in energy costs at today’s valuations.
As per another report by MarketsandMarkets, worldwide LED lighting market is projected to be worth a whopping $92.40 billion by 2022 at a CAGR of 13.66%.
Competition is rife in the LED lighting space with the presence of major players such as Nichia, Samsung LED, Philips Lumileds Lighting, Seoul Semiconductor and LG Innotek.
However, we believe that Cree’s cross licensing agreement with Ledvance will help the company to drive innovation. This will help the company to gain better traction, resulting in top-line growth.
Cree remains focused on driving growth in its LED business. Earlier this month, the company had announced its plans to shift to a larger distribution facility in Wisconsin. The company’s lighting products have been gaining traction among the likes of McLaren Health Care, American Airlines Center, Quest, Food Bank of Central & Eastern North Carolina and Reston Hospital center in the past one year.
Notably, the Zacks Consensus Estimate for Coherent’s current year has remained stable at $7.34 over the last 60 days.
Similarly, the Zacks Consensus Estimate for Dialog Semiconductor’s current year has improved to $3.45 from $2.91 over the last 60 days.
Last but not the least, the Zacks Consensus Estimate for Fortinet’s current year has improved to $3.35 from $2.29 over the last 60 days.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
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Cree, Ledvance Sign Cross Licensing Deal on LED Technology
Shares of Cree, Inc. have been underperforming the Zacks Semiconductor – Discretes industry over the last one year. While the industry gained 5.8%, the stock declined 8.6% over the same time frame.
The underperformance of the stock could be due to stiff competition in the consumer lighting segment. However, growing demand for LED products, recovery in utilization rates and continued cost cutting measures from the company’s end are expected to help the stock rebound in the rest of 2017.
The company recently announced that it has inked a cross license agreement with Ledvance, a leading manufacturer of innovative lighting products. As per the terms of the agreement, Cree will not only receive the ongoing royalty fees from Ledvance but will also gain the license to Ledvance’s patent portfolio without having to pay any royalty fees to the latter.
In return, Ledvance will receive a license pertaining to Cree’s portfolio of patents related to LED luminaires and LED light bulbs.
Notably, the licensed patents discuss the various aspects of manufacturing an LED light that involves the application of optics, LED power and control, heat management, light color, LED light efficiency and uniformity.
However, certain patents involving Cree’s SmartCast (a networked lighting technology) and TrueWhite (a color mixing technology) were excluded from the licensing rights.
What it Means for Cree?
As per a U.S. Department of Energy report, LED lighting is estimated to capture 84% market share in terms of lumen-hour sales with respect to the general illumination market by the year 2030, resulting in savings of over $26 billion in energy costs at today’s valuations.
As per another report by MarketsandMarkets, worldwide LED lighting market is projected to be worth a whopping $92.40 billion by 2022 at a CAGR of 13.66%.
Cree, Inc. Revenue (TTM)
Cree, Inc. Revenue (TTM) | Cree, Inc. Quote
Competition is rife in the LED lighting space with the presence of major players such as Nichia, Samsung LED, Philips Lumileds Lighting, Seoul Semiconductor and LG Innotek.
However, we believe that Cree’s cross licensing agreement with Ledvance will help the company to drive innovation. This will help the company to gain better traction, resulting in top-line growth.
Cree remains focused on driving growth in its LED business. Earlier this month, the company had announced its plans to shift to a larger distribution facility in Wisconsin. The company’s lighting products have been gaining traction among the likes of McLaren Health Care, American Airlines Center, Quest, Food Bank of Central & Eastern North Carolina and Reston Hospital center in the past one year.
Zacks Rank and Key Picks
At present Cree has a Zacks Rank #2 (Buy).
Some other stocks worth considering in the broader technology space include Coherent, Inc. (COHR - Free Report) , Dialog Semiconductor Plc and Fortinet, Inc. (FTNT - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Notably, the Zacks Consensus Estimate for Coherent’s current year has remained stable at $7.34 over the last 60 days.
Similarly, the Zacks Consensus Estimate for Dialog Semiconductor’s current year has improved to $3.45 from $2.91 over the last 60 days.
Last but not the least, the Zacks Consensus Estimate for Fortinet’s current year has improved to $3.35 from $2.29 over the last 60 days.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>