Cree Inc (CREE) Beats Estimates, But Reports Flat Growth

Cree Inc (CREE) reported after the bell today and beat lowered expectations by posting a non GAAP EPS of .13/share (beating estimates by .02) on revenues of $131 million which was basically in line with estimates.  While the company beat estimates and guided revenues a touch higher for next quarter, the growth over the year ago quarter was relatively flat.  Earnings were down 7% from the year ago quarter while revenues were up 5%.  That’s a big decline from the growth seen in 2008 but then again those numbers in 08 were being compared to the 2007 numbers, so a bit distorted.  The bottom line is that  this company is performing quite well in a tough market and retains its leadership status in the LED market. 

“Q3 was a solid quarter for Cree, as we achieved revenue and profits within our previously announced targets,” stated Chuck Swoboda, Cree Chairman and CEO. “Growth in LED lighting partially offset lower demand for auto, mobile and consumer applications in Q3, and we target total LED revenue to rebound in Q4 driven by increased demand for commercial lighting and video screens. As we look ahead to Fiscal 2010, we are targeting our LED lighting and LED component product lines to continue to grow, and we are planning to continue to invest in R&D and capacity to enable this growth.”

For next quarter the company is targeting revenue in the range of $137 – $143 million and an EPS of .13/share which would be another quarter of flat growth over the year ago period.  However, LED demand is expected to pick up in the latter half of the year and current estimates call for an EPS growth of 18% in 2009 over 2008 and a 13% increase in 2010 over 2009. 

It’s no surprise that CREE is off a bit in after hours trading.  The stock has more than doubled off the December lows and the company really  needed to smash estimates to keep that kind of momentum alive.  I’d expect a pull back in the coming months, possibly to around the 20 area. 

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