A quick update on Sonic Solutions Inc. (SNIC:NASDAQ)…

SNIC just released a new line of Microsoft Inc.'s (MSFT:NASDAQ) Windows Vista-compatible photo and video products for new PC's. The line is branded under Sonic's Roxio segment and enables users to capture, enhance, edit and make other creative changes to photos and videos. They will ship with Window's Vista PC's later in the month.

According to PR Newswire, a study undertaken through a joint effort between MSFT and research firm IDC indicates that the new Vista operating system will generate $10 billion in revenue alone for California's IT industry, and 60% of IT employment will be connected to the new Vista program.

Additionally: “The study also forecasts that each dollar of Windows Vista-related revenue earned by Microsoft in 2007 will generate more than $19 in revenue for the ecosystem beyond Microsoft.”

This is a great opportunity of Sonic Solutions Inc. (SNIC:NASDAQ). On the technical side of SNIC's daily chart, price is running along with the 10-day Moving Average, a good spot for a continued increase in share value.

Currently, you're showing gains of 3.4% on SNIC shares from our original entry price. Continue to hold!

Now let's talk a little bit about the increasing industry projections for hybrid technology…

In President Bush's State of the Union address, he proposed a 20% cut in gasoline usage by the year 2017. This includes, of course, the increased use of gas-electric hybrid vehicles. Bush stated, “For too long our nation has been dependent on foreign oil. This dependence leaves us more vulnerable to hostile regimes, and to terrorists, who could cause huge disruptions of oil shipments.''

A little more than a week ago, Arnold Schwarzenegger signed an executive order called the Low Carbon Fuel Standard for California, which requires fuel suppliers to reduce carbon dioxide emissions in vehicles by at least 10% by 2020.

Estimates are that the Low Carbon Fuel Standard will triple California's renewable fuels market and add up to 7 million alternative fuel or hybrid vehicles to the state's highways.

Additionally, the DRIVE Act (Dependence Reduction Through Innovation in Vehicles and Energy) introduced on January 18 by 25 senators is estimated to be able to save America 2.5 million barrels of oil per day by 2016 and 10 million barrels per day by 2031. It sets a target for car manufacturers that 50% of their new vehicles be flexible fuel (FFV), alternative fuel, hybrids, plug-in hybrids or fuel cell vehicles by 2012.

All of these proposals and legislation show that alternative energy, which was considered a fad 20 or 30 years ago, is finally becoming reality.

But there's one commodity that's necessary for any of these manufacturers to increase their hybrid vehicle count: rare earth elements or REEs.

Two rare earths, cerium and lanthanum, are used in nickel-metal hydride batteries, also known as NiMH batteries. 27% of NiMH batteries are used in retail electronics, and 15% of these batteries are used in cordless phones.

But 37% of NiMH battery applications are used in hybrid electric vehicles.

That percentage is growing immensely. From now until at least 2010, rare-earth usage in NiMH batteries will increase at a 39.3% clip annually. That's an increase of 117.9% in only three years!

Recent estimates concerning global demand for hybrid vehicles in 2010 is set at 2 million.

A typical hybrid vehicle will contain about 16 kilograms of rare earth elements, namely cerium and lanthanum (12kg of these rare earths are in the hybrid's NiMH battery, accounting for 30% of the battery's weight).

According to global demand, the world will need at least 25,000 tons of rare earth by 2007 just to keep up with supplying NiMH batteries to the hybrid automobile industry.

Global annual demand for rare earths, taking into consideration its other uses, is expected to be 200,000 tons, compared to the current count of 130,000 tons. So the hybrid industry will be leading one-eighth of the total demand in rare earth supplies. But that should increase incrementally in the next few years.

As of recent data, only 7,200 tons were needed in 2005 for NiMH batteries for hybrids. You're looking at a rare earth demand growth rate of 247% in the next four years, in the hybrid industry alone!

President Bush's State of the Union proposal, a Democratic Congress pushing hybrid vehicles, and Governor Schwarzenegger's initiative at setting the standard for other states to follow the road of decreasing dependence on foreign oil will mean one very important thing: rare earth elements will become even more in demand than ever.