Cree, Inc. (Nasdaq: CREE), a leading LED lighting manufacturer, announced lower revenue and earnings targets for its fiscal second quarter ending December 24, 2006.
Revenue targets are reduced to $90-$92 million due to lower sales of LED chip products. Earnings are targeted to be between $0.12-$0.14 per diluted share, which includes a gain from the sale of marketable securities of approximately $0.09 per diluted share.
Gross margins are also expected to decline to 34-35% because of lower factory utilization associated with the decline in LED chip orders, increased pricing pressure for LED chips and higher startup costs related to the new product lines.
New component product lines, which include XLamp® products, are targeted to grow in line with prior expectations.
“The LED chip market remains challenging, particularly for our mid- brightness products in mobile applications,” stated Chuck Swoboda, Cree’s CEO and chairman. “Despite the slowdown in the LED chip business, we are pleased with the growth in new product sales from our recently introduced lighting class XLamp power LED’s and our ability to attract a global distributor such as Arrow Electronics. These are important steps in our long-term strategy of growing the company through increased sales of higher-value components. Based on our preliminary outlook for Q3, we target the LED chip business to be in a similar range as Q2 with incremental growth coming from the new product lines.”
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