You may know Jim Jubak from his frequent appearances on CNBC. Jubak, the senior markets editor at MSN Money, holds a core investing principle: the conventional wisdom is always wrong. Suffice it to say that this guy has an independent streak, which is a great virtue for the long-term investor. And while I don’t believe that the conventional wisdom is always wrong, I do think that Jubak may have spotted an emerging trend.
The folks in Silicon Valley are always looking for the “next big thing” that will drive growth across the entire technology industry. The advent of the PC was a big thing. So was the Internet. Ditto wireless communication. Jubak believes that the next big thing will involve display technology — innovations in the way that we view words, photographs, graphics, and moving images. If he’s correct, revolutionary improvements in this area could drive growth in software as well as hardware, networks along with personal devices.
Jubak points out that while we’ve seen tremendous innovation in just about every area of digital technology, there’s a glaring exception. “The old bulky cathode ray tube that is probably at the heart of the computer monitor that sits on your desk is a relic from the invention of the television more than 70 years ago. Only in the last year have monitors based on other technologies started to show up in appreciable numbers on desktops,” he says.
In Jubak’s view, a quantum leap in the way we display images could involve not just better PC monitors but widespread digital cameras and VCRs, digital projection of movies, better graphics chips for video games, better printing technology, as well as hardware and software used to create, manipulate and store images. Therefore, he’s picked six companies that stand to benefit from the “display” era. Two of the six are firms that I’ve complimented before. Adobe (ticker symbol: ADBE) makes the popular Acrobat software for displaying printed documents in digital form, as well as Photoshop, used by professionals and amateurs alike in creating and manipulating pictures and graphics. He also likes Nvidia (NVDA), the fast-growing maker of graphics chips. Jubak is sweet on Electronics for Imaging (EFII), ARM Holdings (ARMHY), Genesis Microchip (GNSS) and Gemstar-TV Guide International (GMST), because of its lock on on-screen programming guides and evolving VCR and TV applications.
Arik Hesseldahl of Forbes.com is also impressed with Genesis Microchip’s technology and hyper revenue growth. And Hesseldahl has spotted a few more up-and-comers that could make the LCD display on your laptop look like Stone Age technology. Kopin (KOPN) and eMagin (EMA) are young companies that have recently signed up a number of customers in the Department of Defense. In fact, eMagin will be creating the display technology for a new helmet that Air Force F-15 pilots will begin wearing in 2003.
Both eMagin and another firm called Universal Display (PANL) use a technology called organic light-emitting diodes (OLED) and this stuff (to use the Silicon Valley vernacular) could get really cool in a hurry. Hesseldahl reports that Universal Display is working on transparent display devices that could be rolled up like a window shade when not in use or allow for crystal-clear images to be projected on to your car windshield or eyeglasses. The caveat here is that KOPN, EMA, and PANL are all small, money losing companies and that each carries a substantial amount of risk.
Those investors looking for a larger, more established firm to play in the display era might also consider Motorola (MOT), which is developing new carbon-based display screens that promise to be ultra-thin, ultra-light and require very little power.
And then of course there’s Microsoft (MSFT). Chairman Bill Gates has devoted substantial research to creating a light, convenient electronic tablet that’s as easy and as pleasant to read as a newspaper. And who wouldn’t want that?
