The LED light market is one of the fastest growing markets as the conventional incandescent light is being replaced by LED lights. The global LED lighting market is anticipated to grow at a CAGR of 35.6 percent over the period 2012 to 2016. One of the key factors contributing to this market’s growth is the declining price of LEDs and also the various energy saving benefits offering lower operational costs.
Various rebate schemes offered by the government have also leveraged the growing acceptance of LED lights in the home lights segment. To ride on this growth market, General Electric (NYSE:GE) is now a lot more focused on this market to leverage its top and bottom lines.
GE’s focus on the growing LED lights market is fortified by its acquisition of various LED lights and fixtures companies in the recent past. The buy outs in the past are assisting GE to attain a bigger share of global LED lighting market. The LED lighting market was worth $4.8 billion in 2012 and is anticipated to go to $42 billion by 2019.
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- GE 15-Year Financial Data
- The intrinsic value of GE
- Peter Lynch Chart of GE
The company operates in various divisions which contribute to its total revenue. LED lighting is part of GE lights and appliance sections. The appliance and light division reported revenue of $1.857 billion with segment profits of $53 million. LED light was the only segment of the lighting and appliance division which recorded growth of 33%. This further goes on to strengthen the LED segment of GE.
GE is an established name for decades to provide turnkey lighting solutions for industrial lighting, outdoor lighting and home lights. Various researches go on to reveal that by 2015, LEDs will become the second-leading type of lamp for street lights in terms of sales. By 2020, the study concludes that LED lamps for street lights will generate more than $2 billion in annual revenue. GE lighting offers a wide range of street light solutions which will enable them to have a major share of $2 billion anticipated market in next few years.
GE LED lights have been selected by Wal-Mart, which plans to purchase LED ceiling lighting fixtures for new supercenters in the U.S., stores in Asia and Latin America, and various locations in the UK. This is Walmart’s largest purchase of GE LED lighting to date, and the most recent example of leadership from Wal-Mart and GE to find and scale innovative, energy-efficient lighting solutions.
Another marker leader in LED lighting is Cree (CREE), which also is one of the leaders in LED lights fixture and LED chips. Cree is the company which concentrated more on in-home LED lights and is one of the companies that provided low-cost home LED lights. It was the first one to hit the $10 barrier in LED home lights which was also followed by companies like Philips.
The third quarter 2013 results of Cree were very impressive and posed year-over-year growth in top and bottom lines. The company recorded $405 million in revenue which is 16% year-over-year growth with a net income of $28 million, a 27% year-over-year growth. The growth in the top line of the company was a result of a boost in sales to record 37% year-over-year growth.
Looking into the growth of LED lighting markets companies like GE and Cree are sure to reap the benefits of this growth market. From the investor front, GE has multiple sources of revenue segments which maks it a safe bet. While Cree is mainly into LED lighting solutions as its core business, it gives stringent competition to GE light. But GE is mainly into outdoor and street lighting while Cree mainly focuses on home lights. Both these companies can always be eyed by an investor for long-term growth.