Cree Continues To Disappoint Investors
Shares of Cree (NASDAQ: CREE) fell more than 11 percent on Wednesday and hit a new 52-week low of $21.50 but closed the day at $22.41. Many investors are familiar with the company whose brighter days were seen in 2013 when shares were trading above the $70 per share mark.
However, a series of disappointing earnings streak has turned many investors away from the company which they believed has strong potential in a rapidly growing market.
Cree is a manufacturer of of highly efficient light emitting diode (LED) products, lighting products and semiconductor products for power and radio-frequency applications.
The company reported its 2017 first quarter fiscal results in which the company earned $0.09 per share while revenue fell 10 percent from a year ago to $366.9 million. Wall Street analysts were expecting the company to earn $0.11 per share on revenue of $322.77 million.
Cree also guided its second quarter revenue to fall in a range of $310 million to $330 million, short of the $336.66 million analysts were already modeling while GAAP net income for the quarter was $21 million
As previously mentioned Cree has seen brighter days in 2013. In fact, taking a look back at the company’s first quarter fiscal 2014 results (reported October 22, 2013) shows that the company’s business has suffered over the years.
Cree said in the first quarter three years ago that its revenue rose on a year-over-year basis by 24 percent to $391.0 million and its GAAP net income was $31.8 million.
Three years ago Cree was doing more business and earning more money. Since then the business deteriorated along with its gross margins and heightened competitive pressures.
Taking a look at management’s commentary in the two earnings report reveals the difference in management’s attitude towards the business.
In 2013 management was full of optimism and hope.
“Fiscal 2014 is off to a good start, as we delivered solid Q1 revenue and earnings growth in line with our targets,” stated Chuck Swoboda, Cree Chairman and CEO. “The strong performance was primarily due to increased sales of our lighting products, higher gross margins and improved operating leverage across the business. Based on our backlog, current sales activity and project forecasts, we are targeting growth in all product segments in Q2, led by growth in LED fixtures and the Cree® LED bulb. Even with our success, LED lighting remains a largely untapped opportunity and we remain focused on investing in new products, new channels and building the Cree brand to grow our company and lead the market.”
Can the same be said in Wednesday’s earnings report – you decide:
“We delivered solid results in fiscal Q1, as Lighting, LED Products and Wolfspeed all achieved revenue and gross margins that were in line with our targets,” stated Chuck Swoboda, Cree Chairman and CEO. “We continue to make progress with our transition to a more focused LED lighting company and building a more valuable business by bringing better light to our customers.”
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