Analysis: LEDs companies' rally dims as China beckons


Reuters | February 2, 2011 | Nichola Groom

LED makers have defied the post-crisis market turmoil with off-the-charts share price gains reminiscent of the dot-com boom.

Now, the sudden rise of dozens of government-backed Chinese competitors threatens to steal the thunder of market leaders just as a global transition to super-efficient lighting gets under way.

Light-emitting diodes are used mainly to light consumer electronics products such as mobile phones and television screens. They are poised to unseat incandescent and compact fluorescent light bulbs as governments, businesses and consumers seek to cut electricity costs and curb emissions.

Cree Inc, Philips Lumileds, Siemens’ Osram unit and Japan‘s privately held Nichia Corp and Toyoda Gosei have long been seen as the heirs to the LED lighting fortune.

Cree became a darling of Wall Street, with shares soaring 450 percent between January 2009 and April 2010, when it carried a lofty forward price-to-earnings ratio of 39, according to Thomson Reuters Datastream.


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