So what would Thomas Edison conclude about the future of the lighting industry from the perspective of the manufacturers now that a new light bulb – with LEDs at the heart – are catching on worldwide?
As LED bulbs last years longer than conventional and other types, what are the long-term implications for companies such as Durham-based Cree (Nasdaq: CREE), which have staked their financial futures on the shift to these energy-saving and still improving models?
That’s a question at the heart of an in-depth report from The New York Times in Tuesday’s editions.
Coincidentally, the story appears on the same day that Cree is set to announce its latest quarterly financials.
“The lighting industry has finally come up with an energy-efficient replacement for the standard incandescent bulb that people actually seem to like: the LED bulb,” the Times proclaims.
“Although priced at around 20 times more than the old-fashioned incandescents, bulbs based on LEDs, or light-emitting diodes, last much longer and use far less electricity, a saving that homeowners are beginning to recognize. Prices for the bulbs are falling steadily as retailers like Home Depot and Lowe’s sell them aggressively and manufacturers improve the technology.”
But as more and more companies jump into the LED lighting combat and as prices plunge, what are the bottom-line implications for Cree?
Analysts are all over the map about Cree with upgrades and downgrades.
A day doesn’t seem to pass that Cree alone doesn’t announce some breakthrough in power or quality of light – or both.
Yet the competition has already triggered cut-throat margins. And even as LED demand builds with LEDs forecast to outsell traditional incandescents in North America as soon as 2014 according to The Times report, oversupplies of LEDs themselves remain a problem.
Perhaps Cree and others will benefit from new capabilities such as being able to adjust power and color.
The company has made acquisitions to broaden its reach into other markets. And it doesn’t totally rely on LEDs. Semiconductors remain very important.
Still, despite all the growth in LED lighting sales and the advantages LED bulbs seem to offer, turbulence apparently will continue in the market – thus all the analysts’ differences about just what the future holds.
Bright or dim?