What Cree’s record Q4 means for the LED industry

August 9, 2012 — Cree, Inc. (Nasdaq:CREE), LED and LED lighting company, made revenue of $306.8 million in Q4 fiscal 2012, ended June 24, 2012. This represents a 26% increase compared to revenue of $243.0 million reported for Q4 FY2011 and an 8% increase compared to Q3 FY2012. For fiscal year 2012, Cree reported revenue of $1.16 billion, which represents an 18% increase compared to FY2011 revenue of $988 million.

Cree expects Q1 2013 to be flat to up 6%. You can see Cree’s full fiscal Q4 report here.

Analysts’ takes:

Cree’s results and Q1 FY2013 guidance set the stage for a recovery in FY13 with LED lighting sales gaining momentum and gross margins on the rise, said Maxim Group analysts.

Maxim notes that Cree’s LED business sector was up only 2%, compared to company-wide growth of 8% sequentially. It appears that volume growth is being offset by average selling price (ASP) declines, said Barclays Capital analysts, despite the continued ramp in the LED lighting market. LED sales are expected to remain mostly flat to slightly down in 2013.

Highest growth came from lighting. This could signal lower component sales through 2013, owing in part to Cree becoming a competitor with some customers by acquiring Ruud.

Cree also achieved slightly higher utilization at its LED manufacturing locations and core factory cost reductions, Maxim reported. The analysts believe production costs for Cree’s new product lines — such as the new CR6 series launched in July — offer a step down in costs by cutting the LEDs used from 30 to 6. Gross margin stability and expectations for modest improvements demonstrate the effectiveness of management’s ongoing initiatives to reduce costs, noted Barclays.

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