SemiLEDS (LEDS) Misses Estimates: “LED Industry Remains Challenging”

I’ve been fairly vocal about the bottoming out of solar stocks.. not as much for the LED sector.  I think it’s getting close to confirming a bottom.  The technical action in SemiLEDS (LEDS), a China LED play, has improved significantly in recent months following the news that China is banning incandescent bulbs.

However, this is a company that continues to remain in the red and that didn’t change with yesterday’s earnings report in which the company missed analyst estimates and indicated the industry remains a significant challenge.  The better way to play LEDs is with AIXG, VECO and CREE.

LEDS reported a non GAAP EPS loss of .26/share on revenues of $6.7 million which was below the estimates for a .22/share loss on revenue of $7.6 million.  While the company saw a sequential improvement in revenues, it’s still a nearly 50% decrease from the year ago quarter.

"Our strategy of pursuing the indoor lighting market has already proven fruitful as demonstrated by our financial results. While we achieved sequential revenue growth of 27% and we are pleased with our first quarter results, not much has changed, the industry remains very challenging. We believe the steps we are taking will allow us to weather the storm and position us well for when the industry recovers," said Trung Doan, Chairman and CEO of SemiLEDs.

Looking ahead to next quarter, LEDS expects similar results with revenues in the range of $7 – $8 million and an EPS loss of .26 – .28/share.  That’s below analyst estimates for $9 million in revenue and a loss of .17/share.

Despite the poor earnings report and weak guidance, shares of LEDS are holding up quite well today and currently are trading flat.  That’s a good indication that traders may feel the worst is in the rear view mirror. 

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