Cree Inc (CREE) Misses, Guides Lower, Shares Down 15% AH

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08:59:07 pm on January 18, 2011

Cree Inc (CREE) posted earnings results after the bell today and it didn’t meet the continued lofty expectations of Wall St as traders sent the stock down more than 15%.  The company reported a non GAAP EPS of .55/share on revenues of $257 million but that was shy of Wall St estimates of .58/share in EPS on revenues of $277 million.  Those numbers still represent solid quarter over quarter growth of 55% and 29% in EPS and revenue respectively. 

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“Q2 results reflected continued growth in our LED lighting product line, but revenue and earnings were lower than our targets due primarily to lower sales to our LED component distributors in Asia,” stated Chuck Swoboda, Cree chairman and CEO. “We are managing through an inventory correction in Asia in the near term, but the opportunity in LED lighting has not changed. Quarterly revenue increased 29% year-over-year and based on the market trends we are seeing, and the success of our own LED lighting business, we are more confident that we will see continued adoption of LED lighting over the next several years.”

A portion of the after hours selling is due to weaker guidance as well as the company sees the Asian inventory correction continuing.  For this quarter, the company sees .38 – .45 in EPS vs the Wall St estimate of .58/share on revenues of $245 – $265 vs the consensus estimate of $288 million.

The AH selling takes shares of CREE back to the support range of the Sept/Oct lows and it would appear it will need to trade in  that range for some time and remain in the  long base that began in April of last year.  So there you have it.  It’s clear after CREE’s earnings report that the short term weakness in the LED space is well underway, but at some point the selling will offer a great entry point for long term investors.

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