It’s been a good year for Boston-based digital-lighting leader Color Kinetics, whose stock surged Thursday to an all-time high after the company announced a big licensing deal that will make its LED technology even more visible at events and performances. But shares dipped Friday when a leading analyst downgraded the company from “Buy” to “Hold.”
If you had bought Color Kinetics’ stock last year around this time, you would have paid about $15 a share. On Thursday, the stock closed at twice that—$31.15—after the announcement of a deal with High End Systems of Austin, TX. High End is a leader in lighting systems for the entertainment industry. The companies reported that High End would license Color Kinetics’ patents in order to develop a line of products incorporating multicolor LEDs. The value of the deal, which includes royalty payments to Color Kinetics, was not disclosed. Color Kinetics will also receive royalty-free licenses to certain of the Austin company’s patents.
The good news was tempered by James Ricchiuti, an analyst with investment bank Needham & Company. The Associated Press reported that Ricchiuti praised the deal as firming up Color Kinetics’ lead in the growing market for LED lighting for concerts and other performances. However, it noted that by Ricchiuti’s estimates, the stock price at Thursday’s close was some 49 times the company’s likely 2008 per-share earnings, hence the hold.
Author: Robert Buderi
Bob is Xconomy's founder and chairman. He is one of the country's foremost journalists covering business and technology. As a noted author and magazine editor, he is a sought-after commentator on innovation and global competitiveness. Before taking his most recent position as a research fellow in MIT's Center for International Studies, Bob served as Editor in Chief of MIT's Technology Review, then a 10-times-a-year publication with a circulation of 315,000. Bob led the magazine to numerous editorial and design awards and oversaw its expansion into three foreign editions, electronic newsletters, and highly successful conferences. As BusinessWeek's technology editor, he shared in the 1992 National Magazine Award for The Quality Imperative.
Bob is the author of four books about technology and innovation. Naval Innovation for the 21st Century (2013) is a post-Cold War account of the Office of Naval Research. Guanxi (2006) focuses on Microsoft's Beijing research lab as a metaphor for global competitiveness. Engines of Tomorrow (2000) describes the evolution of corporate research. The Invention That Changed the World (1996) covered a secret lab at MIT during WWII. Bob served on the Council on Competitiveness-sponsored National Innovation Initiative and is an advisor to the Draper Prize Nominating Committee. He has been a regular guest of CNBC's Strategy Session and has spoken about innovation at many venues, including the Business Council, Amazon, eBay, Google, IBM, and Microsoft.
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