Cree maintains that a blue laser -- a laser semiconductor that emits blue light -- will significantly boost the storage capacity of CD-Roms and other optical storage systems. Blue lasers can be focused more narrowly and, therefore, permit more information to be put onto a disc.

Cree stock closed Monday at $14.375, up $1.375.

Last week, an N.C. State University physics professor, Jan Schetzina, determined that the blue laser device fabricated by Cree engineers works. NCSU is working with Cree on a multimillion-dollar U.S. military research contract to develop blue lasers.

Cree is the first U.S.company to produce a blue laser, winning out over a rival development team led by Hewlett-Packard, according to Neal Hunter, Cree's chief executive.

A Japanese company produced the first blue laser ever about a year ago, but Cree contends its technology is better suited for commercialization. Cree's blue laser uses silicon carbide-based wafers that enable it to operate at lower temperatures than the Japanese version, which uses sapphire-based wafers. High heat makes laser light fade.

Analyst Herbert Jackson, managing director of Renaissance Research Group in Richmond, Va., said Cree's accomplishment is impressive. But he stressed that the company remains a long way from transforming its technology into a product.

Cree's first blue laser operates for only a few minutes before it fades away, Hunter said.

Although that seems discouraging, Cree went through a similar learning curve when it developed its blue light-emitting diodes, or LEDs.

Blue LEDs are used as indicator lights and in electronic signs.

"When we made our first blue LED, it was 2 years before we were ready for mass production,"Hunter said.

Hunter said Cree is seeking a corporate partner to help it commercialize its blue laser technology.



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