Earnings Preview: Cree Inc. (NASDAQ: CREE) First Quarter 2011
Tuesday, October 05, 2021 9:47 AM

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Cree Inc. (NASDAQ: CREE) is scheduled to release fiscal first-quarter earnings before the opening bell on Wednesday, October 20, 2010. Analysts, on average, expect the company to report earnings of 58 cents per share on revenue of $277.73 million. In the year-ago quarter, the company reported earnings of 30 cents per share on revenue of $169.13 million.

Cree, Inc. develops and manufactures light emitting diode (LED) products, which include LED chips used in video screens, gaming displays, function indicator lights, and automotive backlighting. The company's silicon carbide and gallium nitride wafers are used in making LEDs, RF and microwave devices, and power devices.

In the preceding fiscal fourth-quarter, the Durham, North Carolina-based company's net income was $52.8 million, or 48 cents a share, compared to $9.7 million, or 11 cents a share, in the prior-year quarter. On an adjusted basis, the company earned 55 cents a share in the latest quarter. Revenue surged 79% to $264.60 million. Analysts, on average, expected the company to report earnings of 51 cents per share on revenue of $264.00 million. Gross margin was up at 49.5%, compared to prior year's 39.6%. GAAP and non-GAAP gross margins are targeted to be 48% to 49%.
Looking ahead to first quarter of fiscal 2011 ending September 26, 2010, Cree expects revenue in a range of $270 million to $280 million with GAAP net income of $52 million to $56 million, or 48 cents to 51 cents per share. Non-GAAP net income is expected to increase quarter-over-quarter to a range of $62 million to $65 million, or 56 cents to 59 cents per share.

The LED industry continues to benefit from rising demand for LED backlighting for TV and growing LED adoption for general lighting. LEDs use far less electricity than traditional incandescent bulbs, saving money in the long run on both bulbs and utility bills. According to Cree, LEDs use 10% to 15% of the power of an incandescent, and about half the power of fluorescent bulbs.  Cree LED lights last as long as 50,000 hours, or 50 times longer than an incandescent light and five times longer than a fluorescent bulb. Unlike conventional fluorescent bulbs, LEDs do not contain toxic mercury. With incandescent light bulbs being gradually phased out by 2012, demand for LED lights is expected to increase significantly over the next few years. However, there are major risks here that investors need to consider. The LED industry is characterized by commoditization, intense competition and lower barriers to entry.

Among other developments, Cree recently announced a new 150mm LED wafer production facility in Research Triangle Park that will allow the company to produce 150mm LED wafers that are more than double the size of current ones, increasing the number of LEDs from a single wafer, helping to make LED lighting more cost-effective. The new production line is scheduled to be installed over the next several quarters with a target of having the first products qualified on this line by June 2011.

In terms of stock performance, Cree shares have lost nearly 5% since the beginning of the year.

Disclosure: Author doesn't own any of the stocks discussed here.
 

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