China's Light Bulb Exodus, New Boom For Battered LED Companies (VECO, CREE, AIXG, RBCN, LEDS, NEXS, EFOI)

If there is one single event that can help an entire sector out immediately, it is when China announces major policy changes.  News is out that China is taking a multi-step plan to stop the use of incandescent light bulbs.  The aim is to reduce power consumption, therefore reducing emissions.  Imports and sales of incandescent bulbs of 100 watts and higher will become subject to a ban in October 2012.  Even those bulbs of 60 watts and above will be phased out supposedly by October 2014.  PRICES UPDATED FOR CLOSE:

Veeco Instruments Inc. (NASDAQ: VECO) was up 8.8% at $28.85 mid-day and closed up 10.15% at $29.20 against a 52-week range of $23.06 to $57.67.  Cree, Inc. (NASDAQ: CREE) was up 6.5% at $29.69 and shares closed up 9.65% at $30.57 against a 52-week range of $23.03 to $31.34.  Aixtron SE (NASDAQ: AIXG) was up 10.9% at $16.59 but shares closed up 9.97% at $16.43 versus a 52-week range of $12.49 to $44.96.

Rubicon Technology, Inc. (NASDAQ: RBCN) was up 12.1% at $11.20 and shares closed up 18% at $11.80 against a 52-week range of $9.25 to $29.75. Its new market cap is about $271 million.  SemiLEDs Corporation (NASDAQ: LEDS) was up 20% at $3.57 but shares closed up 31.4% at $3.89 against a 52-week range of $2.60 to $32.12.  Its adjusted market cap is still only $106 million.

Then there are two very small players: Nexxus Lighting, Inc. (NASDAQ: NEXS) was initially up 3% at $1.658 but closed down 0.6% at $1.60 against a 52-week range of $1.07 to $4.36.  Then there is Energy Focus, Inc. (NASDAQ: EFOI) which was up 16% at $0.35 but closed up 13.3% at $0.34 against a 52-week range of $0.25 to $1.35.

As far as just how big this opportunity is, production of incandescent light bulbs in 2010 totaled 3.85 billion units and domestic sales stood at 1.07 billion units.  After looking at the strength that remained in these, it appears as though the market is going to judge this move as a true game-changing event rather than a one-time pop.  Some of the gains may look too good to be true, but this may have helped establish those lower prices in recent months as a more solid floor.

JON C. OGG