Flat Panel Displays Poised for Takeoff
By Cindy Christ

Remember when personal computer screens were just one color?

If you're old enough to recall the Jurassic period of monochromatic PCs, you'll have no problem grasping the rainbow revolution that's at hand as the world enters the era of ubiquitous computing.

Explosive demand for new wireless and digital devices from handheld computers and smart phones to VCRs and high definition TVs is fueling the development of flat panel displays that are smaller, lighter and multihued.

Although next-generation displays are now used mostly in digital cameras and camcorders, it won't be long before they start popping up on all kinds of portable communications devices.

Analysts say the global market for flat panel displays will grow from $40 billion today to $70 billion by 2003.

"The emergence of virtual displays should help fuel the acceptance of smart phones and other personal communication devices by making it easier for end users to view their data," said Diana Hwang, International Data Corp. senior industry analyst.

Experts say that to achieve wide acceptance, flat panel display technology must first displace older Cathode Ray Tubes, (CRT) which are used in video monitors for TVs and computers.

That phase of the revolution is well underway, with Liquid Crystal Display, or LCD, screens becoming increasingly popular in portable devices thanks to their lightweight and low power requirements.

"I really think the flat panel display industry is ready to explode," said Vincent Sollito, CEO of Photon Dynamics, in an interview Tuesday with CNBC.

"Last year was the first year when flat panel display manufacturers made a profit," he added.

Shares in San Jose, Calif.-based Photon Dynamics (PHTN), which makes diagnostic and testing equipment for flat panel display manufacturers, were up 603 percent last year and 8.5 percent Tuesday at $62.

For first quarter 2000, Photon Dynamic's revenue rose 160 percent to $16.9 million, versus $6.5 million in the year-ago period. Net income was $2.4 million, or 22 cents per diluted share, compared to a net loss of $1.5 million or 16 cents a share last year.

Another company whose share price got a boost from surging demand for flat panel displays is Kopin Corp. (KOPN). Stock in the Taunton, Mass.-based firm was up fivefold last year, trading as low as $6 and as high as $83.

On Tuesday KOPN closed up $3.25, or 4.6 percent, at $73.63.

Kopin, who is the leading maker of small color LCDs under the brand name CyberDisplay, also makes HBT wafers and gallium arsenide transistor chips used in wireless devices and high- speed fiber optic networks.

Analysts expect Kopin to earn revenues of $87 million in 2000 and $203 million in 2001, with earnings per share this year of 45 cents and $1.15 next year.

Last week, the company announced it won a multimillion-dollar display order for Panasonic Camcorders produced by Japan's Matsushita Electric.

In July, Kopin announced a similar deal with Victor Company of Japan, or JVC. "Together, Matsushita and JVC represent over 40 percent of the world market for camcorder viewfinder displays, giving Kopin a global presence in this rapidly growing market," said Kopin president and CEO Dr. John C.C. Fan in a news release.

CRT's and LCD's currently dominate the growing display industry. But not too in the future, experts envision a time when Organic Light Emitting Device, or OLED, technology will transform everything from auto windshields to T-shirts into displays on demand.

Investors who are really forward thinking might take a look at Universal Display Corp. (PANL), a developer of technology that can turn transparent objects, like windows and eyeglasses, and flexible materials, such as plastic roll-up maps, into portable flat panel displays.

"OLEDs are seen as a future replacement technology for Cathode Ray Tubes and Liquid Crystal Displays, due to their bright, beautiful colors, wide viewing angle, compatibility with full motion video, broad temperature ranges, thin and comfortable form factor, low power requirements and the potential for low cost manufacturing process," Universal Display Corp. said.

Shares in PANL were trading higher Tuesday, up $0.81, or 5.7 percent, at $15.13.

Big companies like IBM, which recently introduced a spray-on transistor that the company says could be used to create a roll-up computer screen, and Eastman Kodak, with some basic OLED patents, also offer ways to play the field.

Last fall, Kodak and Sanyo (SANYY) announced a full-color, OLED display that measures 2.5 inches and is thinner than a dime and lighter than a comparable LCD screen.

Firms like Sony (SNE), Philips Electronics (PHG) and Hitachi (HIT) also have a vested interest in display technology, but analysts say it won't be a dominant source of revenue for these consumer electronics giants.

A review of flat panel display technology wouldn't be complete without mentioning one of the most novel, and perhaps useful, approaches, which uses the human eye as the foundation for a display.

Technology developed by Microvision Inc. (MVIS) uses a beam of light scanned onto the retina to project images and information to the viewer's eye.

The five-year-old company has developed prototype Virtual Retinal Display (VRD) devices, including portable color and monochrome versions, and has shipped test units for use during surgery to the Wallace Kettering Neuroscience Institute in Ohio.

The demand for "man wearable" devices for medical use is estimated at $200 to $300 million per year, according to investment broker Ragen MacKenzie.

Analysts say the company's VRD technology will be useful in a variety of applications, including portable communications and visual simulation for defense, medical, industrial and entertainment that may include superimposing images on the user's field of vision.

Shares in MVIS finished up $2.81, or 9.8 percent, at $31.50 Tuesday.