Local Tech Wire

DURHAM, N.C. – Two of the world’s leaders in the growing light emitting diode (LED) lighting market are joining forces in a sense with the stated goal of growing the LED market.

And Wall Street likes the deal for Cree.

Durham-based (Nasdaq: CREE) and Philips (NYSE: PHG), the world’s market share leader in lighting, issued a joint announcement early Wednesday in which they announced a cross-licensing deal involving patents for LEDs and other technology.

Cree shares jumped on the news as trading began, opening up 39 cents at $61.35 and climbed $2.64, or 4.3 percent, to $63.60 in late-morning trading.

By the day’s close, Cree was up more than 8 percent, or $5.11, to close at $66.07.

The rally continued Thursday morning with shares up 1.4 percent, or 86 cents, at $66.93.

Financial terms were not disclosed.

The Cree-Philips deal came just a week after another lighting giant – GE – signed a patent licensing agreement for LED technology with California-based Rambus, Inc. Rambus recently acquired rights to an LED patent portfolio from a Taiwan firm.

The agreement forges a partnership between two companies of vastly different size.

Cree’s market cap is $6.55 billion and its annual revenues are $750 million.

Philips, an international conglomerate based in the Netherlands, has a market cap of $28.5 billion with annual revenues of nearly $30 billion.

The companies said they agreement is intended “to further accelerate the growth of the LED lighting market.”

Cree has been growing rapidly, with revenues driving by LED lighting demand. For the first three months of this year, Cree reported “record” revenues and profits.

Revenues soared 78 percent to $234 million compared to a year ago.

Profits, meanwhile, jumped to $44.6 million from $4 million for the same quarter in 2009. The profit of 47 cents per share after removal of one-time expenses and adjustments topped analysts’ expectations of 44 cents.

For the next three months, Cree projected more revenue growth to between $255 million and $265 million.

However, Cree shares have fallen sharply since hitting a 52-week high of $82.85 on April 15. Cree closed at $60.96 on Tuesday.

Cree also is in the midst of expanding its LED production capabilities.

LED-based lighting and fixtures are gaining growing acceptance worldwide, offering longer life and lower operating costs than other conventional lighting sources.

According to the statement, the agreement covers:

• Blue LED chips
• White LEDS
• Phosphors (substances used for phosphorescence)
• Control systems
• LED luminaires and lamps
• LED backlighting for liquid crystal displays
• Patents in Philips LED Luminaire Licensing Program

“This agreement demonstrates the breadth and depth of both companies’ intellectual property, as well as the fundamental nature and value these patents bring to the market,” said Chuck Swoboda, Cree’s chairman and chief executive officer, in the announcement. “It also signals both companies’ commitment to growing the LED market while respecting the value and importance of international intellectual property laws.”

Philips Lighting CEO Rudy Provoost added: “Philips and Cree have significantly invested in innovation in LED lighting solutions. The wide-ranging IP portfolios of the respective companies reflect the outcome of this effort. We wish to see the accelerated adoption of LED lighting, and are therefore delighted that Cree will be joining our LED Luminaire Licensing Program.”

Reuters noted in its report about the agreement that Provoost has said LED will surpass conventional lighting in market share by 2015.

In April, Cree said it had developed a more efficient LED platform with greater efficiency. The new XLamp XM LED is a single-chip device that delivers a "record-breaking efficacy of 160 lumens per watt at 350 mA."

It also delivers 750 lumens at 2 A, which is equivalent to the light output of a 60 W incandescent light bulb at less than 7 watts.

“We continue to set the pace for LED performance, establishing new benchmarks that make you wonder why anyone would consider last-century’s energy-wasting technology,” Swoboda said.

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