In October, a number of companies reported third quarter results. For the most part, revenues are up, but the profit picture remains mixed. Microdisplay producer Kopin, for example, saw revenues from its CyberDisplay operations increase in the quarter to help eek out a small profit, but prospects are not as bright for the next quarter.

Three-Five's revenues are down from a year ago, with losses for its microdisplay operation forecast to continue into next year. At eMagin, the company is building its microdisplay product revenue, but it is slow going. Revenue from product sales is up, but not enough to make up for revenue derived from contract work a year ago. And at Philips, the US-based Components division will be broken up as a result of stiff competition and lackluster sales. LCOS remains a priority, however, as it will become part of a new business unit with visibility to the top levels of management.

InFocus is feeling the pain too, as it had an unprofitable third quarter. Gross margins were down primarily due to reductions in average selling prices, increased sales of remanufactured units sold at or below cost, fixed manufacturing costs spread over lower revenues, incremental spending to expedite shipments late in the quarter, and incremental service and warranty repair expenses in Europe, partially offset by material cost reductions.

PixelWorks and Genesis each reported increases in revenue, but losses for the quarter. Looking ahead, they are forecasting very nice gross margins of 35 to 48%, but will they be profitable?

So, the picture clearly remains mixed on many fronts. For more about these companies as well as financial news from JVC, Sharp, Thomson and Tweeter, see the Bottom Line section.

This month, we also included a section on big-screen LCDs. These products are going to come on very strong over the next year. Currently, we are witnessing a game of one-upsmanship as companies jockey to offer the biggest commercial LCD TV. LG.Philips held the title last month with a 42-inch product, but Samsung upped the ante right after our deadline with a 46-inch model.

While these units are still very pricey, there is a huge amount of capacity coming on-line in the next year that will flood the market with big-screen LCDs - and you know what that will do to pricing. Plasma TVs and rear-projection TVs will feel the heat, for sure.

In headset news, we caught up on a number of developments this issue. The highlight, perhaps, is the new headset from Sony, which is geared for use with its PlayStation II game platform. It goes on sale in Japan next month for about $475 USD - still too high to sell millions of units, but we think a big step in the right direction.

Other companies will be coming to market soon with higher-resolution headsets for use in entertainment and vertical markets. While about twice as expensive as the Sony headset, these other models will offer SVGA resolution. In fact, we think there might be a bit of a renaissance underway in the near-to-eye space after a gloomy 2002. While 2003 will remain a transition year, 2004 could start to look very interesting on a number of fronts. In our "Microdisplay Forecast & Profile Report," we predict that in 2004, total headset shipments will rise to 240K from only 52K in 2002. And, by 2006, nearly 1 million headsets will ship.

On the microdisplay device front, Philips made news with its new LCOS panel with 1000:1 contrast ratio. This is designed to fit into single-panel TV engines using its spinning prism architecture.

In near-eye displays, Kopin has introduced its first microdisplay using a spatial color filter offering 60K color dots in a 0.25-inch form factor. In addition, Three-Five is shipping SVGA displays from its Zight acquisition, and Displaytech has introduced a QVGA module, which began shipping in a new digital still camera from HP.

So things keep rolling along. We'll have more again next month.
Oh, and by the way, look for news about our upcoming Projection Supply Chain Report (PCSR) soon. This report has about 250 pages of news stories - just like in MDR, but covering all aspects of projection systems - from components to finished products. Lots of good stuff.

Until next time…CC

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