Cree (CREE) Presents at JPMorgan Global Technology, Media and Telecom Conference (Transcript)

| About: Cree, Inc. (CREE)

Cree, Inc. (NASDAQ:CREE)

JPMorgan Global Technology, Media and Telecom Conference

May 21, 2014 10:00 AM ET

Executives

Mike McDevitt - CFO

Analysts

Paul Coster - JPMorgan

Question-and-Answer Session

Paul Coster - JPMorgan

Welcome everyone, JPMorgan 42nd annual TMC conference. My name is Paul Coster. I cover plug emerging technologies here at JPMorgan. I am here with my clean tech hat on. And I am very happy to have Mike McDevitt, CFO of Cree, overweight rated. Welcome sir. Thanks for joining us.

Mike McDevitt

Thanks Paul, thanks for having us.

Paul Coster - JPMorgan

If there is a controversy in this name, and judging by the phone calls I get, there is. It’s playing out in painfully slow motion for both the longs and shorts, because these gross margins seem to hang in there, I don’t know. So might be this is on the long side here, but definitely this one has attracted a lot of interest. Mike, let’s assume now, that there are some folks out there, they are neither familiar with the controversy nor the company in general, so perhaps you could give us an introduction.

Mike McDevitt

Sure, I apologize in advance, fighting a little bit of a travel cold, I think so. But let me get started. Cree, for those of you that don’t know us, right now we are kind of slated if we come in to midpoint of our guidance, to be roughly about $1.7 billion revenue company for fiscal 14 which ends in June. We operate in three segments. Our two largest segments are LED-based. The first and largest segment is our LED chip and component business, where we make our own LED chips and sell those to third parties on a global basis to handle a variety of applications, most principally general illumination or wide light. We also have a lighting segment which is the next vertical step up where we make lighting fixtures for both indoor and outdoor applications. Where you think about on outdoor streetlights, parking lot lighting, area lighting, security lighting, canopy lighting, gas station, petroleum stations. And then on the indoor side predominantly troffers and downlights that we use for any variety of applications in there. And then we also have the LED bulb that we released about a year ago through the Home Depot channel.

And then our third segment is our Power RF segment which is still using our fundamental core, silicon carbide technology to basically make Power Schottky Diodes and MOSFETs to address power supply market, solar inverter market, motor control applications on the power side, and then using gallium nitride on top of the silicon carbide to address the RF wide-bandgap market. From that standpoint, the LED segment is our largest. It’s expected to target to finish a little over 800 million, mid-800 million this year. And then lighting is our fastest growing segment in terms of year-over-year revenue growth and that could be approximately at the mid Ks, about 700 million, in annual revenue. And then power RF segments about a 100 million. From an overall company standpoint, all three of those segments provide good growth opportunities for us. We see them as large areas we can address with our technology and from that standpoint be able to grow, drive revenue growth and drive operating profit growth over the long term, faster than revenue growth.

Paul Coster - JPMorgan

All right, well thanks Mike. So stepping back a little bit, you’ve already made a point that general lighting is the big growth driver here for the company. You are not a participant in backlighting?

Mike McDevitt

We in the LED segment, we may participate opportunistically in backlighting, but it is not a big part of our market.

Paul Coster - JPMorgan

So let’s focus on the products business which at the moment is the biggest component, but I’m guessing within the next two years it will be potentially eclipsed by the lighting product business at least in terms of revenues. Who are your customers for the LED products?

Mike McDevitt

It could be any variety of customers, again the biggest part of what we sell into there is general illumination, so there could be customers that are using it put it in fixtures for both indoor and outdoor applications. We also have some business, that’s in signal, some backlighting flash business and other applications. But the biggest overall application is general illumination market.

Paul Coster - JPMorgan

And do you have a sense of -- is there any way of determining what sort of the application mix is indoor versus outdoor?

Mike McDevitt

I can’t remember the exact percentage of that, but we have a good mix in both indoor and outdoor in that segment.

Paul Coster - JPMorgan

Is that mix changing or so?

Mike McDevitt

They are both growing.

Paul Coster - JPMorgan

You are distinguished here with your -- to see exciting chips and others, with having, perhaps the highest brightness LEDs in the market, or that at least they are balanced. Why does that matter?

Mike McDevitt

What we find through a lot of customers it does matter what they are looking for is high performance LED gives you the ability, basically be able to cost down other parts of your product, make your lighting fixtures more efficient, high reliability and then longer life on durability standpoint. So what we have been able to do, not only for ourselves internally but also for our customers is help them improve their overall products, and that’s why we tend, on our LED business we focus on high-power and high-density type products and not – aren’t worried about chasing the low or low end of the mid power market that’s more commoditized, very price sensitive.

Paul Coster - JPMorgan

The growth rate in that segment seems to be in the single digits, why is that? Given the fact that, we are still talking about 20% to 30% revenue growth perhaps for generalizing and much higher unit growth, why is the growth rate there in the single digits, no double digits?

Mike McDevitt

Yes, we find is we have well in the double digit growth from a unit standpoint but over the course of the last couple of years we basically have changed the platform where we’ve doubled the performance and we look to about every 18 to 24 months tried to achieve from an overall doubling of the performance benefit which effectively means you’re doubling the lumens per dollar and actually to get the same dollar revenue in the LED segment you have to sell two for one. So we’ve been able to do that over the course of that time as also kind of grow the margins back into the mid-45% so we think that’s been pretty successful.

Again relative since we’re not trying to address the broader backlighting market from that standpoint you might not see versus some of our other competitors that have a lot lower margin profile where we don’t have necessarily the same revenue growth but we’ve been able to grow the revenue in the single digits in three to first three quarters of this year we’ve grown the LED segment 11% year-over-year and we think we can kind of continue -- there is enough growth opportunity going forward to continue to expand the LED business as well as generating additional profit.

Paul Coster - JPMorgan

The gross margins in this business are in the mid 40%, right…

Mike McDevitt

That’s right…

Paul Coster - JPMorgan

Versus the corporate in the high 30s, and do you have control over your own destiny in this specific segment in terms of pricing and margins?

Mike McDevitt

I think so in any of our segments or whatever we do basically what we have control over is our ability to improve the cost of our products and thereby effectively reduce the cost of the products we can we’ve had a lot of innovation about six-seven years ago we thought the theoretical lumen and lumens per watt or lumen per watt output was about 200 lumens per watt recently within this year we demonstrated R&D at the LED level of 303 lumens per watt and then in a package card we’ve just demonstrated 200 lumens per watt and even in LED system we’ve gotten the 200 lumens per watt from that standpoint. Most products sold today are in the range of the low 100 to 120, to 130 range, so there is still a lot of innovation that kind of move that up to place no longer talk about where the theoretical limit is we think there is we are a technology leader in the space we see continue to be able to focus on innovation that’s why we spend the amount of money that we spend at R&D versus other people and we’ve been able to over the course of time translate that into operating profit growth and we still see being able to do that over the long term.

Paul Coster - JPMorgan

So well I am great believer in excellence in R&D and innovation ultimately translating into value but I’ll try and do my best and represent maybe a skeptic’s argument here which is that they may concede that very high power high lumens per watt matters a lot in outdoor applications, but as you go indoors you can then start using mid power LEDs which, a commodity very inexpensive and you can achieve the customers’ needs with more of a lumens per dollar focus rather than lumens per watt?

Mike McDevitt

So I think from our standpoint well we’ve experienced and grow on our business is that to our customers it does matter what’s the quality of the product, the reliability life time in that and with the products that we’re developing we’re able to achieve that at the same time where we look at it in the fixture businesses and economic argument is what’s the payback why would you go to LED and we see being able to continue to drive that down where it makes it and with the high power high density stuff, products that we produce been able to achieve that objective and expand our growth and expand the overall market. There is other -- some other market data that’s recently come out that people other people would forecast the high power market continuing to grow as well and not be in a road of high -- mid power or low power.

Paul Coster - JPMorgan

No, perhaps you could give us an example of high power customers of your high power products and why they really care, maybe a sort of used case.

Mike McDevitt

Okay so I think there we have some customers out there and universities and that that have installed our lighting indoors from that standpoint that provide the color consistency as the light time and give them the energy savings and the energy the maintenance savings that they’re looking in the payback that it makes it worthwhile to do it. There may be some segments out there where somebody doesn’t really care about it and they don’t mind replacing the lights every year but that’s not the market that we’re focused on.

Paul Coster - JPMorgan

All right just talk about the lighting product business which is I think the area of interest for most investors it’s growing very rapidly well over 20% still but the margins in that segments are in the high 20s versus the corporate average. And so it feels like there is some -- inevitably some weight on your gross margins over the course of time tell us about what is the strategy behind the lighting product business the actual fixtures?

Mike McDevitt

So couple of years ago we were really a big player in the lighting fixture marketplace so we’ve kind of gone from zero to now being close to a $700 million a year business and seek the growth opportunities there, the focus is, the overall focus as a company is to drive LED adoption and do so profitably that’s why as we talk about the company we talk about revenue growth and operating profit growth faster than revenue growth and the reason that is our share prices tied to earnings, the cash that we put in the bank and EPS and why some people kind of focus on margin, we are looking at all the levers that we can do. We can move between revenue to earnings to drive that. Initially, as we are entering the market kind of building our base, developing the channels that we are selling through, it is a focus on trying to drive that economic argument as it will be in the future as what’s the payback. We could make higher margins today, our business will be smaller that’s not our goal. What we see, as mentioned earlier, our confidence is and ability come out with new products that are lower cost, reduce that payback to the end customer. And over the course of time, we can continue to make incremental improvements over the long-haul where we continue to reduce pricing to the end customer with speeds payback, keep a little bit of that look for ourselves but initially our focus is to get the market going and get LED, drive LED adoption.

Paul Coster - JPMorgan

So, I know you care about gross margins but you care more about gross profit and I mean this is basically stimulating the market, making it larger and make growing this company faster.

Mike McDevitt

I think as we all know overall you put dollars in the bank, you don’t put percentages in the bank, so from that standpoint what our shareholders going to pay us, so we can grow our earnings at a good rate that’s a reasonable return versus them putting their money somewhere else and that’s what we are focused on. We can, like I said, you can harvest margin more and maybe get a short-term bump in profit but longer term you just competing your ability to kind of be successful in the marketplace. And what we are looking for is, it’s a long-term strategy, it’s not a two-three quarter thing where we are trying to maximize that and as we think we can, as we’ve demonstrated over our past, we have the ability to innovate. We are a technology leader in the LED and the power RF space and it’s a long-term play and we think we can continue to do that going forward.

Paul Coster - JP Morgan

Your CEO has talked of sort of the vertical integration being an advantage here. You obviously make the LED modules as well as the overall fixture and somehow this translates into better design holistically, more efficient, cheaper, better solution. Can you talk to that a little bit?

Mike McDevitt

Yes, I think a lot of the stuff with new technologies it’s kind of, it’s about speed to market and what can you do, what is for the end product that you are trying to create the solid customer need, are you optimizing that solution. And from our standpoint and being vertically integrated, we control all the levers in that. A lot of our other competitors basically they have to source somebody else’s LED component then design around that. We can design what we think the fixture needs to be, how do you optimize that and what’s the right LED to put into that, it kind of control all those equations. So, therefore we think we have the ability to control cost structure, make more efficient lighting fixtures, bring cost down, still maintaining reliability and quality at a faster pace than our competitors can overall.

Paul Coster - JP Morgan

In abstract sort of terms it all makes good sense but I think the thing which sort of attracts a lot of attention here is that year ago now you brought out the Cree bulb which went into Home Depot and it’s been advertised on TV and it’s been a great success but of course the price you pay, there is probably low margins for that. And you previously had parabolic bulbs out for high [hats and some] which are in the consumer space and recently you also brought out T8 first in tube equivalent, $30 I think it was which would be kind of breakthrough product inside the commercial space. All of them sparing demand but all of them also, sort of raising questions around ASPs and margins. So, can you talk about the strategy behind these entry level products?

Mike McDevitt

Yes, so to focus on the bulb for a second, why did we do the bulb? One is bigger picture in terms of our lighting segment business. The bigger overall market is the commercial segment. Why do we introduce a product into the consumer segment, commercial buyers are consumers as well, how do we establish Cree as a brand name within the lighting segment. We are very well known within the LED segment prior to that but closer to the end customer that could be buying indoor and outdoor lighting fixtures. We had, there is some awareness of us but it wasn’t as broad as we would like it. The fact that we were able to come out with an LED bulb that had a performance for life-time, looked and felt like a bulb that resonated with consumers and it was a price to get them to move and start buying it versus what was there in the category at that time and still is largely in the category has been a huge success with what the Depot and us have been able to achieve, exceeded both what our expectations were a little over a year into it.

Each quarter since we have released the bulb , our share of voice in the LED market, LED bulb market, our aided awareness that has all increased quarter-over-quarter. So, it’s achieving the objective that we want. The longer term play is that we’ll also resonate in and be able to establish brand and help us grow fuel growth -- fuel additional growth in the lighting business because more people will know about us and be able to pull, create some of that pull through versus having to push everything through, large as we have been in LED space, a lot of our competitors have non-LED traditional business and part of that is them balancing their non-LED business versus their LED business whereas we are pure LED play. While we have a little non-LED business that we acquired with the Ruud acquisition, the Ruud’s had effectively transitioned their business to an LED business prior to us acquiring them. So, we’ve got that state, we’re able to push it through and we’re able to be aggressive on it. And that’s another reason why we vertically integrate this to be able to move market faster and we think we’ve had good success in doing that at this point to continue to do so going forward.

Paul Coster

So how does this part of the strategy evolve over time -- I guess one way of thinking about this is some percentage or some of the gross margin that you’ve kind of given up by forcing the price down could well have been marketing budget below the line , but you’ve chosen to grow brand through products. I think that’s a totally valid strategy. But once you’ve built the brand you then start to throttle back on the entry level product.

Mike McDevitt

Yes I think as brand investment and from the bulb standpoint we look at it, most people might focus on what’s it done to the lighting segment margins our focus has been, it’s a paid for marketing campaign versus some people as Paul just mentioned they just sink marketing dollars in and then hope the revenue comes down the road, we’ve been able to use the bulb to generate and provide the funds to do the corporate branding exercise. And then in addition to what the depot has done in helping and promoting our product.

On the other products like you mentioned the LED T8 replacement that we just released. It’s a plug and play to an existing T8 non-LED to some of the products that we released is one to show what can be done, have high quality products and then also knowing that we continue to cost down as we go forward and do that balancing between margin and lighting adoption from that overall standpoint.

And within the lighting segment there is going to be a mix, not all our products make the same margin, it depends on what the market application is and what product that’s competing against in there. Over the course of time though we do see being able in the lighting segment to incrementally make improvements over the long haul to the margin in that segment.

Paul Coster - JPMorgan

So in state of this particular product led branding exercises the commercial and industrial customer actually does care about brand. Can you sort of give us some examples of how that might work? I have always imagined they kind of do RFPs and they wait for lowest bidder and they’re not particularly focused on brand and more focused on the channel.

Mike McDevitt

Yes, I think so to some extent why a brand and what does a brand mean to you I think by and large the majority of the customers out there, there will be some customers that all they care about is the lowest price. But we think the large part of market is going to care about life time and quality and where we want to develop the Cree brand too, as filling that need in quality long life time lower (inaudible) cost, lower maintenance cost from that standpoint. And that’s where we think from that brand is why wouldn’t they buy Cree versus everybody else. I think a lot of the lighting segment has traditionally the channel, some of the channels have been on a relationship basis and what we’re trying to do is distinguish not only selling on a relationship basis but also having a product that stands alone on its self that people want versus everything else that’s out there.

Paul Coster - JPMorgan

So I think the people sort of looking for easy answers for Cree and it doesn’t feel like that to me, it feels like a quite subtle story. And what makes it -- makes me sort of more confident about the outcome here is that you’re operating from a position of strength and you are leader in the market. But you also the industry seems to be supply constraint little it, and you are constrained a little bit. So the incremental decisions you’re making are entirely your discretion, you’re not being forced to make them by the market. And I assume that there is a balanced intentional investment strategy, here is some brand investment some profit focus on growth focus and is that the correct way of depicting this?

Mike McDevitt

Yes, as we’ve done in over the course of our history our divestments always on the technology side has been focused on coming out with new or lower cost products that still provide value and don’t sacrifice quality. On the brand, it’s all about the end game in terms of establishing and being able to drive LED adoption and Cree getting more than its fair share of that growth as lighting transitions from traditional technologies to LED. From an investment in terms of how do we satisfy that revenue demand, our eyes always been on continuing to make incremental investments to fund, to be able to make that revenue growth happen? But then from time to time making sure that we make some of those additional investments or hedge capacity, so that there is upside to the market we’re in position to do it. Like Chuck talked about in our last conference call is that we upgraded our CapEx for this year, part of that is we’re running fuller, so we need some incremental capacity to fuel not only Q4 but what we see in near-term growth in all our businesses and then two to get somewhat ahead, so as rest of the industry you’re seeing indicators that that’s going to capacity is filling up and the industry to get to the head align on that.

The good thing is like the last time we made a big tranche on capacity investment when we’re moving to -- starting to move to 150, we can as a company we’re in a position where we can afford to spend the cash today and then we deploy the assets as we need them in that case, there as we start -- we’ve been making the transition to 150 as we need an incremental capacity not to do fundamental shift. And part of that was we continue to make advances in 100 millimeters wafer development, increase throughput and increased yield from that standpoint where we didn’t have to deploy some of that capital as fast as we might otherwise have had to.

Paul Coster - JPMorgan

You’re somewhat unique in the market by having silicon carbide substrate strategy versus the sapphire that most markets gone with. What is this mean over the long-term in terms of the sort of cost curve?

Mike McDevitt

Yes, so, I think at the end product standpoint, the substrate whether it would be silicon carbide or sapphire is relatively small part of the cost with silicon carbide given us advantage on as how effectively we can grow and how good our epi is and from that package standpoint which is led to performance benefits which puts us in front of the market. As we look going forward, we look at it and applications and opportunity by opportunity whether there will be some end market applications where silicon carbide, gallium nitride provide that benefit. There may be some others where doesn’t where the value that we add to the equation is really how we package that LED or put a fixture around that LED. And we’ll look to not only balance the capacity that we’re adding on but what other capacity we might be able to tap outside of that.

Paul Coster - JPMorgan

I think most of your LED product now is based SCQ platform, are we sort of approaching next generation of LED?

Mike McDevitt

I think in some respect you’ve already seen that. You’ve seen that some other people talk about chip level packing from that. Some of our newer LED products like the XH. Those are effectively chip level packaging where the chip and substrate are one close together that we don’t. We haven’t made any big announcement on it. We see it as a natural evaluation of where we’re going in terms of trying to overall increase, have the same or better performance and be able to reduce the cost get more lumens effectively more lumens of a wafer and then reduce packaging cost and fixture cost around that.

Paul Coster - JPMorgan

Okay. In the last conference all, the CEO said that this potential supply constraints industry wide in the second half of this calendar year, what’s the origination of that comment?

Mike McDevitt

So I think part of that is our own where our factories are running fuller than they have at this --over the course of this year. You have other people that are out there talking about that they’re running full. There is still some people who have asked us is this kind of okay when is the next semi cycle now. Our pricing should firm up in that. The answer is we don’t know. We still hear that there is some pockets of capacity they’re out there but it’s just general guidance of what people are talking about that people are starting to fill up in capacity which would start the next wave in the investment.

Paul Coster - JPMorgan

You’ve also mentioned the industry consolidation is possible?

Mike McDevitt

Yes, I think as you look at any big industry that as it grows and it’s fragmented it undergoes some consolidation as Chuck talked about on our conference call kind of mentioned it that. Hey, we’ll be looking at opportunities. The reality is we look at opportunities all the time from the standpoint of what we do from an M&A standpoint while there is nothing eminent. We do look for things that could either improve our presence in the channel and again focused on driving LED adoption. Also if there is opportunity on the power and RF segments something that can increase for channel another technology bolt-on or something that we’re working on and somebody else is working on that would be good value from that standpoint anything that can help us basically grow revenues and add accretive value to our earnings stream is something that we’re open minded to explore. But on a big macro standpoint, you would expect that some point there could some industry consolidation.

Paul Coster - JPMorgan

I constantly reason why you would be interested in vertical industry consolidation, it has to be horizontal, is that -- what it has to be, but do you agree with this more likely to be?

Mike McDevitt

I think right now we’re open minded to the opportunities. We’ll how things evolve over the course of time. We, you know, the more natural thing that you would think about and something that’s bolt-on that could be horizontal but vertical we’re open minded to it. If we think it’s a value added add on to what we do today and can help us achieve the objective and that’s where we see the market moving in a long term when it roll it out the equation.

Paul Coster - JPMorgan

And are there any disruptive technologies GaN on GaN, I think is what sometimes mentioned that potentially could change things for you or suppose [indiscernible] wanting to put some?

Mike McDevitt

Right, there is a [ladder] people have talked about GaN on GaN. There is various other people talk about growing on the silicon for LEDs. There is various things that are explored from that standpoint. We keep our eye on it. Right now, we don’t see anything that’s eminent versus what’s in the industry today. But it’s always -- we always have an eye out on what other disruptive technologies could impact business.

Paul Coster - JPMorgan

So there is no sort of debate around the growth here. It’s just a question of whether the and it’s sounds like you’re focus more on gross profit and gross margin, but you nonetheless is sort of running fairly tight band on the gross margin front. If you look out two or three years from now, can you say anything about your intended business model?

Mike McDevitt

If I could give you that specifics I’ll be doing something else for a living, but what I would say is again our focus is on revenue growth and we believe we have revenue growth opportunities in all three our segments and then operating profit growth invariably in there it can only control your OpEx so much so the gross profit will have to grow to. I think it will be a function of how the markets evolve in the mix, but we believe over the long-term we can continue to grow revenue at a good pace. If you look at over the last 12 years or so, Cree has been able to year-on-year have compounded annual revenue growth of plus -- around 22% and then this year as you look at how we’re growing our operating profit it’s over 30% growth for the first three quarters. And if we do the midpoint of our range in Q4, that would be 27% growth year-over-year. So if we can keep that trajectory going on, we believe we’ll show good value to our shareholders.

Paul Coster - JPMorgan

I’ve got one question here. I thought now we would notice but yes of course you have growing RF Power business and it’s growing at pretty toward right, do you think that is sustainable?

Mike McDevitt

Well, our Power RF business right now for this year that if we come on plan, it will be roughly $100 million business but the market opportunity there in the long-term we see it as the multi-billion dollar marketplace. Now in Power RF business, the selling cycles due to the overall reliability testing and the big units that’s a lot longer sales cycle. In the long-term, we’re really encouraged about what the opportunities are on there, but it will be a let’s say a slower revenue growth dollar a revenue growth pace than what we see in the lighting segment, but still see good opportunities over the long term.

Paul Coster – JPMorgan

And here is a new one. Any thoughts on graphene-based LEDs that have a lower cost structure?

Mike McDevitt

Graphene based LEDs? That is a good one. I have to get back to you on them, not really aware of that.

Paul Coster – JPMorgan

Okay. Nothing else new. Any questions from the audience please?

Unidentified Analyst

[Question Inaudible]

Paul Coster – JPMorgan

What is the biggest factor driving the cost down over the next 12 to 18 months, thank you.

Mike McDevitt

The way we look at it is, there is no one big hairy thing that kind of go take and drive cost down, that is really working all parts of the equation. What we found, I think one of the benefits to us being vertically integrated as we’re able to get more efficient with the LEDs, it allows us to reduce the cost of a lot of the other bill of materials particularly in the lighting fixture.

When you look at the lighting fixture, there is more cost in the other bill of materials and there is in the LED content that’s in there now. In our LED segment, there is higher percentage of the cost is LED related but by being able to improve the performance of our LEDs and the fixtures that we provide we’re able to fundamentally reduce the cost of those fixtures. So there is a little bit -- we look at symbiotic relationships on the fixture side both not only in the fixtures and what we’ve been able do in cost down on bulb is on the LED side. The efficiencies that we’re able to do on the LED how they may be packaged, we can drive all those levers as well in terms of packaging substrate with other package components go into that product and the same thing on the Power RF side, increasing reliability performance and being able to get more dye of a wafer help all the above.

Unidentified Analyst

[Question Inaudible]

Mike McDevitt

Yes, what I would see on that and we still see we will continue to be a technology innovation company. Again, general illumination, LED penetration into that space if you had DOE stats is in mid-single digits, so there is a huge opportunity out in front of us. So we do believe a lot of it is about innovation that innovation helps drive product quality, product performance that people want to pay for it at the end of the day. I don’t think we’ve focused on getting paid and compensated for the value that we provided not just throwing LEDs out there and it doesn’t matter if they degrade very fast from that standpoint. That’s where we see if we can continue to play and really add a lot of value and growth the business successfully. So don’t see that change in at all.

Paul Coster - JPMorgan

So I’ve got one other question here which is -- I’ll give you two choices you can either tell us exactly what the share price would be at the end of this year or alternatively why don’t you do a share buyback?

Mike McDevitt

So, we did do a share buyback. We announced a couple of weeks ago that we were in the market recently and we bought back a 100 million in shares is the most highest share buyback that Cree has done in its history at anyone single time. Also in addition with that, we’re just coming out of our quarterly Board meeting. The Board extended given us authorization up through the end of our fiscal 15 year to buy up to 300 million back and effectively what we did is we reloaded that 100 that we just repurchased. We do our share buybacks opportunistically. We thought where the price was at that point in time. It was a good use of $100 million use of capital. We tend to look at that opportunistic and we think we did make a pretty good statement with that recently.

Paul Coster - JPMorgan

Awesome, I think we’re actually out of time so I am so sorry.

Unidentified Analyst

[Question Inaudible]

Mike McDevitt

$100 million, yes.

Paul Coster - JPMorgan

All right. Good questions. Thanks. I apologize. All right, that’s it. Thanks so much everyone. Appreciate your time.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!