24 March 2011

Cree cuts March-quarter revenue forecast by 15%

LED chip, lamp and lighting fixture maker Cree Inc of Durham, NC, USA has cut its revenue forecast for fiscal third-quarter 2011 (ending 27 March) by about 15%, from $245–265m to $215–220m. This follows a decline in revenue from $268.4m in fiscal Q1 and $257m in fiscal Q2, and would be down about 7% on $234.1m for fiscal Q3/2010.

The revised revenue forecast is attributed mainly to lower sales of LED chips and LED components. The firm says that demand for LED components is improving post-Chinese New Year, but revenue is lower than originally targeted. It has taken longer to work through customer inventories than previously anticipated and pricing was lower than forecast. The LED chip business is also weaker than targeted due to more aggressive pricing and weaker demand.

Cree has also cut its forecast for gross margin from 46% to about 43%. This is attributed mainly to increased pricing pressure in the LED chip product line. Operating expenses are expected to be slightly lower than previously targeted $73m (or $62m on a non-GAAP basis).

After the announcement yesterday, Cree’s share price fell 12.5%, from $49.00 to $42.90 (down 35% this year, and its lowest since the end of 2009).

“The LED components business appears to be turning the corner,” comments CEO & chairman Chuck Swoboda. “Despite the challenges we faced in Q3, distributor sell-through has improved and we target solid growth next quarter,” he adds. “Based on our preliminary outlook for Q4, we are currently targeting revenue to increase 10–12% in fiscal Q4 [to $237–246m], led by growth in LED components.” This forecast is even even after factoring in a “very aggressive pricing environment”.

See related items:

Cree’s sales falls 4% after standards-induced pause in China LED streetlights

Cree’s quarterly revenue rises 1.5% to another record of $268m

Cree reports annual revenue up 53% as LED lighting sales double year-on-year

Record, above-target performance at Cree from buoyant lighting market

Tags: Cree LEDs

Visit: www.cree.com

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