Cree's lighting strategy brings dazzling sales
LED manufacturer Cree has surpassed its previous revenue records on two counts in its most recent financial results, despite lower chip production.
A quarterly best $135.9 million in the period ended June 2008 helped increase annual sales 25 percent to a highest-ever $493 million for the full fiscal year.
The largest single driver of Cree's above-expectation result was its XLamp packaged LED components, for which sales grew 140 percent from 2007. Demand from architectural, portable and vehicle lighting applications was responsible for this sales growth.
“Our strategy to drive revenue growth by focusing on LED lighting worked well,” said Chuck Swoboda, Cree's CEO.
Part of that strategy has been the acquisition of Hong Kong, China, based LED packager COTCO, which is now almost exclusively responsible for XLamp packaging. Cree completed a trebling of XLamp packaging capacity at this Hong Kong site in the last quarter and plans a further doubling for its fiscal 2009.
Another lighting-focused acquisition has been Cree's North Carolina neighbour LED Lighting Fixtures (LLF), which is itself a big XLamp customer in producing replacements for conventional lightbulbs.
“If we had not bought LLF, [the XLamp sales increase] would have been up higher because we don t get to count those sales anymore,” Swoboda pointed out.
In the June quarter the LLF business brought in sales of over $2.5 million, and Cree is now expecting double-digit growth from that level.
Although COTCO has clearly delivered strong XLamp sales growth, these two deals have wreaked havoc with Cree's profit figures. Combined with the sale of shares it held in Color Kinetics "“ now Philips Solid State Lighting Solutions "“ the official net income for the year dropped to $33.4 million from $57.3 million.
The forthcoming quarter's results will also be hit, with a $60 million payment due on the basis of the performance of the former COTCO business.
Cree s main June period surprise came through higher-than expected sales of the company's non-XLamp, high-brightness packaged LEDs, driven by large-area video displays.
However, bare LED die sales fell slightly over the past three months. Furthermore, although Cree packages its own die into its other products, fab usage fell as it reduced its inventory levels.
In non-LED and contract business the company expects a 10-15 percent decline in revenues for the next quarter. This is due to build up of inventory at its SiC power devices customers and delays in RF foundry jobs.
Regardless of this drag on the strength of its core business, Cree is still expecting its revenues to grow again, targeting the $138 million to $142 million range for the September period.