DOW Boosts LED portfolio

Dow Chemical Company’s (DOW - Analyst Report) electronic business unit, Dow Electronic Materials, acquired Lightscape Materials in order to boost its light emitting diodes(LED) portfolio. The financial terms of the deal are yet to be disclosed. The company acquired Lightscape Materials' from a group of investors, including South Korean firm Wisepower and U.S.-based SRI International.

Lightscape Materials is a New Jersey-based research company, which holds intellectual property in specialty phosphor technology. The phosphor compositions result in improved quality, reliability and output color of LED light-based systems. Phosphors improve the color quality while making the applications more sophisticated. The acquisition will allow Dow to add phosphor technology to its existing LED technologies portfolio.

DOW is a Michigan-based chemical company, whose products are used across a broad spectrum of industries. In the first quarter of 2012, the company posted earnings of 61 cents a share (excluding specific one-time items), surpassing the Zacks Consensus Estimate of 59 cents. However, it was below the year-ago adjusted earnings of 82 cents.

Revenues dropped marginally year over year to $14,719 million, lagging behind the Zacks Consensus Estimate of $15,342 billion. Double-digit growth across agricultural and feedstock/energy businesses were masked by declines in performance materials and performance plastics franchises.

Though Dow did not provide any specific financial guidance, it believes economic recovery will gain momentum in the second quarter and the remainder of the year. The company expects to meet its short- and long-term targets irrespective of economic conditions. Moreover, Dow sees an improving U.S. economy citing tailwind from the nation’s rich access to low-cost natural gas. Further, it benefits from strong fundamentals in agriculture and food markets.

However, weaknesses in the electronics and construction end-markets may sustain into the second quarter. Moreover, the company will continue facing challenges in Western Europe due to weak demand and the sovereign debt crisis.

Dow faces stiff competition from EI DuPont de Nemours & Co. (DD - Analyst Report). Currently, the stock retains a Zacks #3 Rank, indicating a short-term “Hold” rating and we have a long-term “Neutral” recommendation on the shares of the company.