Cree Misses Again, Guides Lower - And Still No Sign of Bottom

Apr.25.11 | About: Cree, Inc. (CREE)

One important event of last week was the earnings report out of LED leader Cree Inc. (NASDAQ:CREE). The company disappointed analysts again, missing the EPS estimate and guiding lower as well. The stock remained under pressure as a result.

CREE posted an EPS of 0.27/share vs the Wall Street estimate of 0.29/share on revenues of $219 million vs the Wall Street estimate of $217 million, which is about what the company forecasted in late March. It represents the first quarter of negative growth for both EPS and revenues in quite some time, and that’s expected to be the case this quarter as well. The company is forecasting EPS of 0.25-0.31 vs the Street estimate for 0.36/share.

“Q3 results were in line with our revised lower targets for the quarter,” stated Chuck Swoboda, Cree chairman and CEO. “The results reflect both our continued success in LED lighting and the challenges of managing the LED chip and components business through a business cycle with short lead-times and low order visibility. We continue to be a leader in LED lighting and remain confident we are on the right track as we look forward to further disrupting the market and leading the LED lighting revolution in the years ahead.”

Technically, shares of CREE continue to look weak having taken out important support around the $47 level a few weeks ago (now around $40) and there is still no firm signal that the stock has bottomed out and beginning a new trend up. I still believe this correction will offer an incredible opportunity to get in on an LED leader; it’s just too soon yet.