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Cree net income slashed 57% and profit by 18%

The firm’s latest quarterly results showed that the operating income was also greatly reduced (by 65%) over the same quarter last year.

Cree has reports its financial results for the third quarter of fiscal year 2011. 



The company announced revenue of $219.2 million for its third quarter of fiscal 2011, ended March 27, 2011. This represents a 6% decrease compared to revenue of $234.1 million reported for the third fiscal quarter last year and a 15% decrease compared to the second quarter of fiscal 2011. GAAP net income for the third quarter of $18.9 million, or $0.17 per diluted share, decreased 58% year-over-year compared to GAAP net income of $44.6 million, or $0.41 per diluted share, for the third quarter of fiscal 2010.

“Q3 results were in-line with our revised lower targets for the quarter,” stated Chuck Swoboda, Cree chairman and CEO. “The results reflect both our continued success in LED lighting and the challenges of managing the LED chip and components business through a business cycle with short lead-times and low order visibility. We continue to be a leader in LED lighting and remain confident we are on the right track as we look forward to further disrupting the market and leading the LED lighting revolution in the years ahead.”

Q3 2011 Financial Metrics:

* Cash and investments ended the quarter at $1,073.1 million, which was a decrease of $37.7 million from Q2 of fiscal 2011.

* Accounts receivable (net) decreased $9.2 million from Q2 of fiscal 2011 to $125.9 million, with days sales outstanding of 52, an increase of 5 days from Q2 of fiscal 2011.

* Inventory increased $24.1 million from Q2 of fiscal 2011 to $169.6 million and represents 119 days of inventory, an increase of 23 days from Q2 of fiscal 2011.

 

Recent Business Highlights:

* Signed a comprehensive, worldwide patent cross-license agreement with Osram GmbH designed to further accelerate the growth of the LED lighting market.

* Announced a two-year extension of the strategic agreement signed with Zumtobel Lighting GmbH in 2008.

* Introduced the Cree XLamp MT-G LED, which is the first LED to deliver the performance required for high-output halogen retrofit applications such as 35 to 50 watt MR16 replacement bulbs.

* Released the Cree XLamp XM-L EasyWhite LED, which delivers a lower cost solution for 25 watt replacement lamps by combining the benefits of our unique colour mixing technology in a single high output, small footprint package.

* Set a new industry benchmark for colour rendering with the commercial release of the Cree LBR-30TM LED lamp.

Business Outlook:

For its fourth quarter of fiscal 2011 ending June 26, 2011, Cree targets revenue in a range of $225 million to $245 million with GAAP gross margin targeted at 40%. GAAP operating expenses are targeted to increase by approximately $0.5 million to $72 million. The tax rate is targeted at 14% for fiscal Q4.

GAAP net income is targeted at $16 million to $23 million, or $0.15 to $0.21 per diluted share. The GAAP net income target is based on an estimated 110.5 million diluted weighted average shares.

Cree hosted a conference call to review the highlights of the fiscal third quarter 2011 results and the fiscal fourth quarter 2011 business outlook.

The call is archived and available on Cree’s website through May 3, 2011.
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