Technology Stocks : OLED Universal Display Corp
OLED 121.45+0.1%Sep 21 5:10 PM EDTNews

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To: EvanG who wrote (14080)1/2/2018 9:32:59 PM
From: slacker7119 Recommendations

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A.J. Mullen

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In the case of the host materials fiasco they admitted that their supply chain management was not sufficient and needed improvements.

I wasnt thinking of the extraordinarily long supply chain for their host materials when I made that comment. I was talking about their relationship with Samsung. UDC had no idea that Samsung was going to move away from their host materials entirely until it was actually happening. That is why the write down was so big. UDC was still ordering new materials for legacy products that Samsung had no intention of ever ordering.

I have no issue with Samsung choosing to go with a cheaper supplier. However, not telling your "partner" that you have designed them out of their products that will be shipping in the next three months is something else entirely. UDC takes all of the supply chain risk and only knows about Samsung's decisions when they see orders for shipment....which they ship the next day.

Management likes to use terms like win/win but in the case of Samsung, they are going to win regardless of what kind of agreement they sign with UDC. The incremental royalties that UDC is likely asking for are in the sub-$100 million range which is absolute peanuts when you are talking about the ~$30 billion in revenue and ~$6 billion in profits that Samsung might make from OLED's next year.

With the prior Samsung agreement they admitted that they needed more expertise involved and engaged negotiators from Disney who do this type of thing all the time.

This is a good point. They change in negotiators will hopefully lead to some different results. The fact that they have managed to sign the Chinese vendors is a great sign.

We'll see. A delay of a few weeks is no big deal but they should not give Samsung a short-term extension.

Management is the good cops and us greedy shareholders are the bad cops. Management degrading Samsung will only lead to Qualcomm type problems.

I dont want to go to far afield here but the current Qualcomm/Apple fight absolutely proves my point.

Apple had the best royalty deal on the planet (less than 2%) and was getting chipset rebates from Qualcomm that no other vendor was commanding. Qualcomm was literally paying Apple not to sue and all of their public comments concentrated on their good relationship with Apple.

None of it mattered.

Nobody likes the tax collector and UDC and Qualcomm are viewed as exactly that. It doesnt matter how much either company (or shareholders) think that they have contributed to the field. Their licensees see 100% margins on the royalties and will attempt to reduce those costs at every opportunity. The goal should be to maximize royalty revenue because giving Samsung a deal will not help at all if Samsung sees a chance to remove the UDC "tax".

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