Cree Inc. (Nasdaq: CREE) – Q3 FY 2011 Earnings Preview
Thursday, April 07, 2022 3:30 PM

Cree Inc. (Nasdaq: CREE), a market leader in LED chips, power LED's, LED backlighting, power switching and wireless communications devices, is expected o report its third quarter FY 2011 results on April 19. For the last four quarters, the reported EPS by CREE missed analysts’ consensus estimate for the quarter ended December 2010 by a margin of 5.20 percent. However for the three quarters ended September 2010, reported EPS exceeded analysts’ consensus estimate by margins in the range of 3.40 percent and 7.80 percent.

About Cree's business from Cree: "Cree, Inc. develops and manufactures semiconductor materials and devices primarily based on silicon carbide (SiC), gallium nitride (GaN) and related compounds. The physical and electronic properties of SiC and GaN offer technical advantages over traditional silicon, gallium arsenide (GaAs), sapphire and other materials used for certain electronic applications. On March 4, 2011, CREE announced a two-year extension of the strategic agreement signed with Zumtobel Lighting GmbH in 2008. Cree Inc. and Zumtobel expect to increase their hold in Europe as part of their strategic agreement."

For the second quarter of 2011, Cree Inc. reported revenue of $257 million, up 29 percent compared to revenue of $199.5 million in the second quarter last year. GAAP net income for the second quarter increased 47% year-over-year to $49.8 million, or $0.45 per diluted share, compared to GAAP net income of $33.8 million, or $0.32 per diluted share, for the second quarter of FY 2010. On a non-GAAP basis, net income for the second quarter of FY 2011 increased 51% year-over-year to $60.7 million, or $0.55 per diluted share, compared to non-GAAP net income for the second quarter of FY 2010 of $40.2 million, or $0.38 per diluted share.

For FY 2010, the company reported total revenue of $867.3 million, growth of 53 percent compared to revenues of $567.3 million in FY 2009. Net income for the period was $152.3 million, or $1.45 per share, a 4 times increase compared to $30.3 million / $0.34 per share in 2009. The company did not pay any dividend during last fiscal and it currently does not have any dividend plan. There were no stock repurchase either during FY 2010.

On March 23, Cree, by press release, reduced its third quarter estimates due to lower sales of LED chips and LED components during the quarter. The company now expects revenue in the range of $215 million to $220 million, down from $245 million to $265 million estimated at the end of the second quarter. The reduction in the estimates is also attributed to the increasing pricing pressure in the LED chip product line.

For the third quarter, analysts’ EPS estimate range from a low of $0.24 to $0.44 per share, with a consensus estimate of $0.30 per share. Net income was $0.47 a year earlier. . For the quarter, analysts’ revenue estimates range from a low of $214 million to a high of $223 million, compared to sales of $234 million in the same quarter a year ago. For the quarter which ended in March, the consensus EPS forecast has been reduced from $0.58 per share estimated 90 days ago, to its current consensus estimate of $0.30 per share.

In the last 52 weeks, Cree’s shares have been trading in the range of $42.76 to $83.38. The stock is near the low end of the 52-week range and little new news is expected from the earnings release. Always nice for management to get the bad news out a few weeks early with a press release.