Cree makes the bulk of its revenue from of selling LED chips and components to other LED bulb and lighting makers. The company is profitable and doing well.

On Tuesday Cree also announced a better-than-expected earnings, raising its guidance for its fiscal third quarter, and reported better than expected profit and revenue for the current quarter. Cree earned $20.4 million on revenue of $346.3 million for the most recent quarter. Along with those strong earnings Cree saw its shares jump 12.5 percent in morning trading (as much as 19 percent earlier this morning).

Cree is selling three new LED bulbs: 1). a 40-watt, warm white replacement for $9.97, 2). a 60-watt, warm white replacement for $12.97, and 3). a 60-watt day light for $13.97. Cree says the bulbs save 84 percent of the energy that would be used by comparable incandescent bulbs, last 25 times longer, and come with a 10-year warranty.

As we explained in our research report for GigaOM Pro (subscription required), the LED market has hit a turning point, particularly for commercial and industrial building owners who are installing LEDs because it makes financial sense. Check out our report on LEDs (digest here), written by Ucilia Wang, and here’s our podcast discussion about the report.

It’s been a harder sell to get consumers to buy LEDs, but with new cheap products like this line from Cree that will slowly change. Still, consumers expect super cheap bulbs — compact fluorescents can sell for a buck or two, and incandescents for well under a $1.

Other companies that sell low cost consumer LEDs include GE (which bought LED startup Albeo last year), Philips and Lemnis Lighting, which introduced a bulb last year for under $5. Worldwide sales of LEDs rose 2.1 percent to $13.7 billion in 2012 from $11.3 billion in 2011, and will grow to $16.4 billion by 2017, according to Strategies Unlimited.

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This imbalance of supply and demand is also happening at a time when market researchers are expecting growth for the LED market to slow in the next several years. Our new report on the LED lighting sector on GigaOm Pro (subscription required) focuses on the latest LED technology, new applications, and the role that LEDs are playing in the increasingly digitized home.

While LED lighting isn’t widely used in homes yet, the technology isn’t new. LEDs are commonly used for indicator and traffic lights. But improving the technology so that it can radiate the same intensity, warmth and even distribution as incumbent incandescent and fluorescent lighting continue to be a challenge.

Already, the making of the diodes themselves is cornered by rivals with large factories. Eleven companies control over 70 percent of the market for LEDs packaged to be turned into bulbs and fixtures. That makes it more difficult for startups to fight for market shares against the likes of Philips, Samsung, Cree and Osram Opto Semiconductors. Many of the large LED manufacturers also design and make their own LED bulbs and lighting systems.

Meanwhile, venture capitalists in recent years have shied away from investing in manufacturing technologies. Manufacturing technologies often take a lot longer to scale and more money than expected to reach the market. Even when they do, many forces — from strong competition to changes in public incentives that have driven clean tech’s growth — have gutted the ambitions of new entrants who thought their technology breakthroughs would naturally lead to high customer demand and profits.

What will be interesting to watch are new business models that go beyond just the sales of LEDs and their bulbs and fixtures. LEDs share a similar DNA as other semiconductor-based technologies, from sensors to wireless networking. Marrying lighting with these technologies can deliver uses in sectors from farming to location-based services. LED lighting, in effect, will serve multiple functions and occupy a spot in the widening web of Internet-dependent goods and services.

Photos courtesy of  Soraa and Ucilia Wang. 

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Illumitex is looking to raise $25.23 million in total in this round, and has closed $13.5 million of that. Investors listed on Illumitex’s filing include Dan Watkins at DFJ Mercury, and Forest Baskett and Jimmy Treybig at New Enterprise Associates. New Enterprise Associates and DFJ previously invested in Illumitex.

The Austin, Texas company, founded in 2005, publicized a $10.5 million B round back in 2008, and last December raised $3.4 million in debt and options, according to this filing. In October 2009, Illumitex also got $4.3 million in equity in a total $10 million round, according to an SEC filing. That year also happened to be the time when financial market meltdown crippled fundraising activities and the overall cleantech market.

Illumitex develops LED chips and assembles them into modules that will be built into light bulbs and installations. The company is targeting the general lighting market as well as lighting designs that accentuate architectural buildings and lighting designs that can help plants grow in greenhouses.

The startup says it’s been able to shrink the number of components in its LEDs by forgoing the use of secondary optics that lead to the dome shape devices commonly found in other LEDs. In addition, the company has been able to develop LED chips that can still emit bright and precisely aimed beams in smaller packages, while the smaller package saves space and allows lighting system makers to squeeze more of them into an installation.

Illumitex announced several new products earlier this year, but it remains to be seen whether it’s able to win large customer orders to continue in a market where competition has intensified, particularly from Asian manufacturers. Although the price for LED lights has declined, it hasn’t fallen quick enough for mass adoption.

The LED lighting market hasn’t grown as quickly as some investors and tech developers have hoped. Cree CEO Chuck Swoboda, told Reuters  Monday that the payback period for LED lighting systems still remains too long. Cree develops LEDs and packages them into bulbs.

Photo courtesy of Illumitex

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While I fully support the stimulus package’s investments into energy innovation, I’m not sure the metrics are doing exactly what the White House is purporting, which is trying to “prove” that the stimulus is working with data. I think it’s still waaay too early to do that. However, I think in general, the stimulus funds have been allocated in a smart manner, despite the innate difficulties of bureaucrats trying to pick winners and losers, and some potential missteps.

Biden also didn’t mention the fact that a significant chunk of the funds haven’t been handed over yet, and the deadline to allocate the money is looming on Sept. 30, 2010 (it’s use it or lose it by that time). A couple of weeks ago, Inspector General Gregory Friedman said that even though the DOE had increased its staff to try to get all the funds out of the door, “two of the Department’s major projects have less than 50 percent of their Recovery Act funds obligated. And, as of the date of this review [Aug. 4], none of the programs has obligated 100 percent of their respective funding.” I think Friedman’s report is one of the reasons for the press conference today.

In Biden’s speech, he spoke about battery plants, solar thermal in the Mojave Desert, and the smart grid, and specifically called out a meeting with the CEO of LED chip maker Cree. Here are the metrics that are supposed to prove the stimulus funds are being spent well. The U.S. is now on track (thanks to the stimulus) to:

• Cut the cost of solar power in half by 2015. In addition, the report says the cost of power from rooftop solar panels will drop from $0.21 per kWh in 2009 to $0.10 per kWh in 2015, and as low as $0.06 per kWh by 2030. The cost of utility-scale solar projects will drop from $0.13 per kWh today to $0.06 in 2015.

• Cut the cost of batteries for electric vehicles by 70 percent between 2009 and 2015. This means that an all-electric vehicle will fall from $33,000 to $10,000, and the cost of typical plug-in hybrid batteries will drop from $13,000 to $4,000. The weight of a typical electric-vehicle battery is forecast to decrease by 33 percent, from 333 kilograms to 222 kilograms, by 2015. The lighter battery means a lighter car, which means less energy is needed to power the car. A typical battery is expected to last 14 years in 2015: more than three times as long as the current 4-year lifetime.

• Double U.S. renewable energy generation capacity and U.S. renewable manufacturing capacity by 2012. Stimulus funds will double renewable energy capacity from the 28.8 GW of solar, wind, and geothermal generation that has been installed as of 2008, to 57.6 GW by the end of 2011, and double renewable energy manufacturing capacity from an annual output of 6 GW of renewable equipment (like wind turbines or solar panels) to 12 GW by the end of 2011. This will increase the U.S. share of global manufacturing of solar photovoltaic modules from 8 percent of all production, to 14 percent by 2012.

• Green Jobs. The real metric that critics of the Obama administration will look at is how many jobs were created, given the stimulus is supposed to stimulate the economy. Steven Chu said these above breakthroughs are helping to create “tens of thousands of new jobs,” and helping the U.S. to “continue as a leader in the global economy.”

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SunPower:

SunPower, which makes high-efficiency solar panels, saw its revenues gain, its earnings drop, and gave a boosted annual earnings guidance in its second quarter earnings release today. SunPower generated revenues of $384.2 million for the second quarter of 2010, up from $299.3 million from the second quarter of 2009, and saw a net loss of $6.2 million for second quarter ofs 2010, down from an earnings of $14.3 million for the second quarter of 2009.

Wall Street was happy, as SunPower boosted the earnings outlook for the year by 10 cents a share to $1.35 to $1.65. SunPower’s stock rose almost 3 percent in after-hour trading.

As TheStreet.com put it: “No one was expecting a big quarter from SunPower.” And yep, they pretty much got that. One more interesting tidbit is that SunPower also announced a deal to build a 15 MW solar farm at Luke Airforce Base in Glendale, Ariz., which would sell power to Arizona utility APS. Construction is supposed to start in January and create 550 local jobs. APS also has plans to buy power from solar thermal plants being built in the region, which makes me wonder if SunPower’s solar PV is now cheaper to buy (and quicker to deploy) than the solar thermal tech.

Cree:

LED chip lighting firm Cree saw one of the biggest jumps out of our greentech movers for its fourth quarter earnings announcement today. Cree generated $264.6 million for its fourth quarter of 2010, up from $148.1 million for the fourth quarter of 2009. Cree earned $52.85 million for the quarter, up significantly from $9.7 million for the fourth quarter of 2009. The demand for LEDs has started to grow nicely, and Cree is now reaping the benefits of the LED market. However, Cree saw its shares drop over 8 percent in after-hour trading, because of an updated outlook for the next quarter that didn’t meet analyst expectations.

A123 Systems:

Next-gen battery maker A123Systems had the most ‘bummer’ of an earnings statement out of the greentech players today. The company, which is heavily backed by Department of Energy grants, said its second quarter losses grew as it’s looking to ramp up production. The company reported a loss of $34.2 million, down from a loss of $21.9 million from the second quarter of 2009. A123 generated revenues of $22.6 million for the quarter, up slightly from $19.7 million from second quarter 2009. The company’s stock dropped over 4 percent in after-hour trading.

LDK Solar:

Chinese solar wafer maker LDK Solar also had a particularly strong earnings announcement for its second quarter. LDK said it had a net income of $45 million up dramatically from a loss of $216.9 million from second quarter 2009 (that earnings was handicapped by an inventory writedown), while revenues jumped to $565.3 million from $228.3 million a year earlier. The company’s stock rose 5 percent in after-hour trading.

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Image courtesy of LiewCF

Today’s awards mark the last of the ARPA-E grants funded under the Recovery Act. According the DOE, it has now awarded $349 million in grants to 117 projects in three rounds since last year. Created in 2007, the ARPA-E program was left unfunded until the 2009 stimulus package.

Each of the projects in this latest round falls into one of three categories, covering modular devices for storing energy for the power grid, components for improving the efficiency and cost of power conversion and switching across the electrical grid, and systems for cooling buildings efficiently with less reliance on refrigerants.

Click to view the full list of project selections in this ARPA-E round (PDF download).

Companies scoring funds in today’s round, which drew 529 concept papers in the initial application process, include flywheel developer Beacon Power , battery maker Fluidic Energy, flow battery companies General Atomics and Primus Power, and fuel cell developer Proton Energy, as well as lighting tech giant Cree, Boeing, GE Global Research and GeneSic Semiconductor.

Toyota will be working with the University of Arkansas, Oak Ridge National Lab and Cree on a project led by Arkansas Power Electronics International that bagged one of the largest grants, for nearly $4 million, to develop low-cost, highly efficient power electronics for rapid charging of plug-in hybrid vehicles.

More than a third (36 percent) of the projects are being headed up by universities, including MIT and Virginia Tech, while large businesses are leading about a quarter (24 percent). National labs and non-profits are leading 5 percent and 2 percent, respectively, of the projects in this round. You can download the full list of awards and check out the technical project descriptions here.

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Hardware

• Thickness: iPhone 9.3 mm; EVO 12.7 mm
• Display size: iPhone 3.5 in.; EVO 4.3 in.
• Display resolution: iPhone 960×640; EVO 800×480
• Rear camera: iPhone 5 MP; EVO 8 MP
• HD video recording: iPhone yes; EVO yes
• HDMI out: iPhone no; EVO yes
• Front camera: iPhone yes; EVO yes
• Kickstand: iPhone no; EVO yes
• Dual microphones (noise cancellation): iPhone yes; EVO no

Software

• OS: iOS 4; Android 2.1 (2.2 promised soon)
• Navigation: iPhone no; EVO yes (two free apps)
• Video chat: iPhone Wi-Fi only; EVO Wi-fi/3G/4G (two apps)
• Multitasking: iPhone limited; EVO full
• Carrier support (U.S.): iPhone AT&T; EVO Sprint
• Mobile broadband support: iPhone 3G; EVO 3G/4G (WiMAX)
• OS updates: iPhone via iTunes; EVO OTA
• Hotspot: iPhone none; EVO mobile hotspot (carrier charge)
• Flash support: iPhone no; EVO Flash lite yes, Flash 10.1 coming

It may seem like I’ve stacked the deck against the iPhone, and perhaps so. I do believe the iPhone 4 is a sweet smartphone, and it has the full Apple ecosystem behind it, which is powerful stuff. I also believe that the Sprint EVO 4G is the most advanced smartphone hardware available — that high-res iPhone screen aside –and it can certainly hold its own in this head-to-head comparison.

Related research on GigaOM Pro (sub req’d): Will Metered Mobile Data Slow the App Market’s Growth?

If consumers are ready to start thinking about the big picture of lighting, the LED bulb could be a deal. It can provide 77 percent energy savings and last 25 times longer than an incandescent bulb. It can also fit into a standard incandescent socket, which is important, because having to buy both LED bulbs and fixtures has been one of the barriers to convincing consumers to buy LEDs. On top of that, the bulb provides 450 lumens, compared to most LED bulbs which commonly produce 350 lumens or less.

But there’s that price point that plagues the LED market. Say you buy an incandescent bulb for between 50 cents and $1 — GE’s LED bulb could cost 50 to 100 times that. You can buy a GE compact fluorescent bulb, or CFL — a bulb that is more efficient than an incandescent — for about $4, which would still cost 10 times less than the LED bulb. The cost still needs to come down for LED bulbs to convince an average consumer.

The lighting market will ultimately move completely to CFLs and LED for lighting, and governments and companies throughout the world have been phasing out incandescents and recently Toshiba was the latest company to cease incandescent production. The U.S. will be phasing out incandescents starting in 2012.

There’s been some innovation in the lighting space from startups, but it’s mostly been focused on the commercial and industrial lighting market which are willing to factor in energy savings over the long term. I’ve been waiting for Silicon Valley startup Superbulbs, which, like GE’s new product, makes LED light bulbs that look and act like traditional incandescent bulbs, to start selling. CREE (a public company but an LED innovator) is providing the LED chip for GE’s new LED bulb.

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