Find me another debt-free semiconductor:
We ended December with $365.0 million in cash and investments and continue to be debt free. Year-to-date cash provided by operations was $84.7 million and capital expenditures were $31.5 million, resulting in free cash flow of $53.2 million.
We continue to make capital investments to support new product introduction but we have reduced our overall capital spending for the year by over 25%.
LED doing well; short term uncertainty. CREE is investing more in LED long term.:
We target LED component revenue to be down single digits in Q3 as solid demand for indoor and outdoor commercial lighting and China video screens is offset by lower demand for portable lighting applications, like LED flashlights
We target R&D to be down from reduced spending and materials and LED chips yet we are maintaining LED component R&D levels and increasing our LED lighting products R&D.
Gross margin increased to 36.8% in Q2. The increase was primarily driven by higher LED chip and wafer factory utilization, improved yields in both LED chips and XLamp LED components, and some benefit due to a more favorable LED product mix.
CES made it pretty clear, notebooks are going to LEDs and there is a lot of talk at CES about trying to take TVs there as well.
But the notebook one has happened... As I look out over calendar 2009 I would expect that that will be a net growth area for the chip business because almost everyone I see is talking about putting LEDs in their notebooks. That will be a net benefit to us and other suppliers from a chip standpoint.
Infrastructure in the U.S. and China:
Q: Looking out towards the back half of the year, there is going to be some money released in the U.S. towards infrastructure projects that are green and toward green retrofits. What can you do, as a company, to try to target some of that money and make sure that the folks in Washington and state and local governments are aware of the benefits of some of your products?
A: Obviously we will continue to work on projects like the Pentagon when we’re able to do that directly.
One of the keys is to be able to show them that it really works. And so I think the Pentagon raised a lot of eyebrows... They were able to put together some payback numbers that I think have opened a lot of people’s eyes.
When it comes to China domestic infrastructure, so far it has remained pretty solid for us.
But municipalities are curtailing projects:
There is some amount of projects that look like they’re delays but I would say it’s more of one or two out of ten are delayed and the vast majority that we have been working on are at least continuing forward at this point... Some of the projects we see are municipalities... We had some LR24 installs at the Federal Reserve and then we also had a very small amount for the Pentagon. Most of that will ship here over the next several months.