Emcore sells GELcore stake for $100m in cash
Emcore has sold its half-share in GELcore, the joint-venture company that it formed in 1999 with General Electric's consumer and industrial division, for $100 million in cash.
General Electric (GE) has purchased Emcore's share in the company, and has also entered into a strategic alliance with Nichia, the Japanese producer of GaN-based LEDs and laser diodes.
Along with Germany's Osram and Philips in The Netherlands, GE is one of the world's three key manufacturers of light bulbs, and the move demonstrates the US company's commitment to the solid-state lighting technology that may ultimately replace its bulbs.
It also brings GE s LED focus onto a par with that of Osram and Philips, who already have total control of their Osram Opto Semiconductors and Philips Lumileds subsidiaries.
Michael Petras, GE's VP of electrical distribution and lighting, said, "GE and Nichia's combined excellence creates an alliance that is ideally suited to support GELcore's efforts to accelerate the growth and penetration of LED-based lighting solutions in the $12 billion global lighting segment."
GELcore, whose current products include traffic lights, channel letters, and other signage systems based around high-brightness LEDs, recorded a net loss of $1.3 million in the first six months of 2006. Emcore's cumulative share of losses in the venture since its inception totaled $16.1 million.
Following the sale of its electronic materials division (EMD) to UK epiwafer outsourcer IQE earlier in the month, the GELcore deal is yet another sign of Emcore's increasing focus on fiber-optic components and solar power.
CEO Reuben Richards said, "The sale of GELcore has come at an opportune time, as we enter the terrestrial solar [business], which represents an enormous end market for Emcore."
Emcore's balance sheet will enjoy a combined net gain of about $100 million as a result of the GELcore and EMD deals, putting the New Jersey company in a very strong position for potential future acquisitions.
The cash generated could also be used to beef up Emcore's solar cell manufacturing capacity as sales orders for triple-junction devices continue to mount up.
