Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Cree (NASDAQ:CREE)

Q1 2012 Earnings Call

October 18, 2011 5:00 pm ET

Executives

Raiford Garrabrant - Director of Investor Relations

Charles M. Swoboda - Chairman of the Board, Chief Executive Officer and President

John T. Kurtzweil - Chief Financial Officer, Chief Accounting Officer, Executive Vice President of Finance and Treasurer

Analysts

Carter B. Shoop - KeyBanc Capital Markets Inc., Research Division

Harsh N. Kumar - Morgan Keegan & Company, Inc., Research Division

Daniel L. Amir - Lazard Capital Markets LLC, Research Division

Andrew Huang - Sterne Agee & Leach Inc., Research Division

Ahmar M. Zaman - Piper Jaffray Companies, Research Division

Steven Milunovich - BofA Merrill Lynch, Research Division

Jonathan Dorsheimer - Canaccord Genuity, Research Division

Dale Pfau - Cantor Fitzgerald & Co., Research Division

Christopher Blansett - JP Morgan Chase & Co, Research Division

Farhan Ahmad

Joshua Paradise - Morgan Stanley, Research Division

Mark Heller - Credit Agricole Securities (NYSE:USA) Inc., Research Division

Operator

Good afternoon. My name is Matthew, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Cree, Inc. Q1 Fiscal Year 2012 Conference Call. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, October 18, 2011, at 5:00 p.m. Eastern time. Thank you. I would now like to introduce Raiford Garrabrant, Director of Investor Relations of Cree, Inc. Mr. Garrabrant, you may begin your conference.

Raiford Garrabrant

Thank you, Matthew, and good afternoon. Welcome to Cree's First Quarter Fiscal 2012 Earnings Conference Call. By now, you should have all received a copy of the press release. If you did not receive a copy, please call our office at (919) 287-7895, and we will be pleased to assist you.

Today, Chuck Swoboda, our Chairman and CEO; and John Kurtzweil, Cree's CFO, will report on our results for the first quarter of fiscal year 2012. Please note that we will be presenting both GAAP and non-GAAP financial results in our remarks during today's call, which are reconciled in our press release and financial metrics posted in the Investor Relations section of our website at www.cree.com under Quarterly Results in the Financial Information tab.

Today's presentations include forward-looking statements about our business outlook, and we may make other forward-looking statements during the call. These may include comments concerning trends in revenue, gross margin and earnings, plans for new products and other forward-looking statements indicated by words like anticipate, expect, target and estimate. Such forward-looking statements are subject to numerous risks and uncertainties.

Our press release today and the SEC filings noted in the release mention important factors that could cause actual results to differ materially. Also, we'd like to note that we will be limiting our comments regarding Cree's first quarter for fiscal year 2012 to a discussion of the information included in our earnings release and the metrics posted on our website. We will not be able to answer any questions that will involve providing additional financial information about the quarter beyond the comments made in the prepared remarks.

This call is being recorded on behalf of the company. The presentations and the recording of this call are copyrighted property of the company, and no other recording, reproduction or transcription is permitted, unless authorized by the company in writing.

Consistent with our previous conference calls, we are requesting that only sell-side analysts ask questions during the Q&A session. Also, since we plan to complete the call in the allotted time of one hour, we ask that analysts limit themselves to one question and one follow-up. We recognize that other investors may have additional questions, and we welcome you to contact us after the call by e-mail or phone at (919) 287-7895.

We are also webcasting our conference call, and a replay will be available on our website through November 1, 2011. Now I'd like to turn the call over to Chuck.

Charles M. Swoboda

Thank you, Raiford. We got off to a good start in the first quarter as our LED lighting and LED component product lines continued to deliver solid growth. We also took the next step in our strategy to lead the LED Lighting Revolution with the acquisition of Ruud Lighting. Ruud, with their well-known BetaLED brand, is one of the most successful companies in outdoor LED lighting, and the combination puts Cree in an even better position to lead the market and drive LED lighting adoption.

Q1 revenue increased 11% from Q4 to $269 million, while non-GAAP net income decreased 8% sequentially to $28 million or $0.25 per diluted share. Both revenue and earnings were in line with our updated target range for the quarter. The revenue growth in Q1 was driven by approximately $20 million in net sales from our acquisition of Ruud Lighting in the second half of the fiscal quarter, strong growth in sales of Cree's indoor LED lighting products to our commercial and retail customers and solid growth in XLamp LED component sales across a range of lighting applications, which offset lower LED chip and Power sales.

Non-GAAP gross margin was 37.4% in Q1, which was in line with our post-acquisition targets. Consistent with our plan for the quarter, the gross margin was driven by several factors: factory utilization that was slightly higher but still relatively low overall; sales of higher-cost LED inventory that was produced in Q4; increased percentage of LED lighting products, which currently have slightly lower margins; and the continuing competitive LED pricing environment, which was partially offset by yield improvements and other cost reductions.

We continue to manage factory starts to reduce inventory while also trying to maintain flexibility to respond to short lead time expectations in the market. As a result, non-Ruud-related inventory declined from Q4.

Cash and investments decreased to $632 million as a result of the Ruud acquisition. Free cash flow was $8 million in Q1, and we are in a strong position to continue to invest in our business and lead the market and accelerate the adoption of LED lighting.

Orders are tracking ahead of this point last quarter, and overall demand trends are similar to Q1. The growth in demand is coming from LED components and LED lighting, which includes both our indoor products and our BetaLED outdoor products. The strength in lighting demand reflects the growing reality that LED lighting adoption is happening now.

We secured significant new business in Q1 based on the merits of our lighting technology and ability to deliver products with compelling payback to the customer. The buying decisions on these large commercial products do not rely on government subsidies. Rather, they are decided on the quality of the light and standard ROI or payback calculations that take into account energy and maintenance savings.

Sales through our LED component distributor partners grew again in Q1, and we were able to further reduce channel inventories during the quarter. Although demand has improved over the last 2 quarters, we continue to operate in a competitive environment with short lead times and limited visibility, which makes it challenging to forecast the business.

I'll now turn the call over to John Kurtzweil to review our first quarter financial results in more detail, as well as our targets for the second quarter of fiscal 2012.

John T. Kurtzweil

Thank you, Chuck. I will be providing commentary on our financial statements on both a GAAP and non-GAAP basis, which is consistent with how management measures Cree's results internally. However, non-GAAP results are not in accordance with GAAP and may not be comparable to non-GAAP information provided by other companies.

Non-GAAP information should be considered a supplement to and not a substitute for financial statements prepared in accordance with GAAP. A reconciliation of the non-GAAP information to the corresponding GAAP measures for all quarters mentioned on this call is posted on our website along with the historical summary of other key metrics.

For the first quarter of fiscal 2012, revenue increased 11% sequentially to $269 million, which is within our updated target range of $265 million to $275 million. This includes approximately $20 million in net revenue from Ruud Lighting during the quarter. Beginning this quarter, we are presenting our revenue in 3 categories: LED products revenue was $196.8 million, which includes LED components, LED chips and materials; Lighting products revenue was $51.7 million, which includes revenue for our indoor lighting products and Ruud Lighting; and Power and RF products revenue was $20.5 million.

GAAP net income was $12.8 million. GAAP diluted earnings per share were $0.11 per share. On a non-GAAP basis, net income was $28.1 million. Non-GAAP diluted earnings per share were $0.25. Non-GAAP net income excludes $15.2 million of expense, net of tax, or $0.14 per diluted share from the amortization of acquired intangibles, stock-based compensation expense, the step-up value of Ruud Lighting finished goods inventory and direct acquisition expenses such as auditing, banking and legal fees.

We ended the quarter with $632 million in cash and investments, which reflects the following: the payment of $372 million cash portion of the Ruud Lighting acquisition; payment of $85 million in cash to fund Ruud Lighting's acquisition of E-conolight; and to pay off Ruud Lighting debt. Cash provided by operations was $42 million. Depreciation and amortization was $32 million. CapEx per PP&E was $34 million, and free cash flow was $8 million.

Q1 GAAP gross margin was 36.4% while non-GAAP gross margin was 37.4%, which excludes stock-based compensation expense of $1.7 million and $0.9 million related to the step-up value of the Ruud Lighting finished goods inventory that flowed through during the quarter. This was in line with our post-acquisition's non-GAAP target to be at the low end of 38% to 39%.

Operating expenses for Q1 were $84.6 million on a GAAP basis and $67.9 million on a non-GAAP basis. Non-GAAP operating expenses exclude approximately $9.7 million of stock-based compensation expense, $3.9 million of charges for amortization of acquired intangibles and $3 million of direct acquisition-related expenses.

Non-GAAP R&D expenditures increased $4.1 million sequentially and were approximately $1.1 million higher than our target for the quarter, primarily due to increased spending on our 150-millimeter wafer program.

Non-GAAP SG&A expenditures increased $2.3 million sequentially and were approximately $2.7 million lower than our target, primarily related to lower selling expenses and integration costs.

Net interest income and other for the quarter was $2.9 million, which was higher than our original target and included $1 million gain on the sale of investments. The tax rate was 21.5%, which was on our target of 21.5% for the quarter.

To provide you a better trend analysis for the company going forward, the metrics for days sales outstanding and inventory days were calculated as if Ruud Lighting was part of the company for the entire quarter. Days sales outstanding were 50 days. Accounts receivable increased $47 million to $165 million, of which $22 million was related to Ruud Lighting.

Inventory days were 96. Inventory increased by $27 million to $204 million. Non-Rudd Lighting inventory was down $11 million, and Ruud Lighting inventory was $38 million. PP&E additions were $34 million in the first quarter. We are actively managing this while continuing to invest in long-term growth of the company. We continue to invest in our strategic priorities to lead the market and drive adoption of LED lighting, plus accelerate cost reductions such as the 150-millimeter wafer production.

Our capital commitment target for the fiscal year remains approximately $160 million, but this target now includes the capital requirements for Ruud Lighting. At this time, we target Q2 revenue to be in the range of $300 million to $320 million, which is being driven by solid growth in lighting from our indoor LED lighting products, BetaLED products and the addition of Ruud Lighting revenue for an entire quarter, flat to higher LED product sales, which includes growth in LED components and slightly lower LED chip sales and lower Power and RF sales.

GAAP gross margins are targeted to be 36% to 37%, and non-GAAP gross margins are targeted to be 37% to 38%. These targets factor in benefits from yields improvements and cost reduction programs, which are offset by competitive pricing environment. Our GAAP gross margin targets include stock-based compensation expense of approximately $2.3 million and $0.5 million related to the step-up value of the Ruud Lighting finished goods inventory that will flow through during the quarter while our non-GAAP targets do not.

We are targeting non-GAAP R&D expense to increase by approximately $1 million in Q2 to further support LED chip development, the 150-millimeter LED chip product qualifications, new LED component platforms, plus continued investment in both our indoor and outdoor LED lighting products.

We target non-GAAP selling expense to increase by approximately $7.5 million and for G&A to be up approximately $2 million. This increase is primarily related to a full quarter of expenses related to the Ruud Lighting acquisition and approximately $1 million of integration costs. We target asset impairments of approximately $0.5 million for the quarter. Our GAAP operating expense targets include noncash stock-based compensation expense of approximately $3 million in R&D, plus $8.4 million in SG&A and charges for amortization of acquired intangibles in the amount of $5.9 million.

Net interest income and other is targeted to be approximately $1.5 million. We target our tax rate to be 21.5% for both fiscal Q2 and fiscal year 2012.

GAAP net income for Q2 is targeted at $13 million to $18 million based on estimated 118 million diluted shares outstanding. Our GAAP EPS target is $0.11 to $0.15 per diluted share. Non-GAAP net income is targeted to be $29 million to $33 million or $0.25 to $0.28 per diluted share. Our non-GAAP EPS target excludes amortization of acquired intangibles, noncash stock-based compensation and the step-up value of the Ruud Lighting finished goods inventory in the amount of $0.14 per share.

Thank you, and I will now turn the call back over to Chuck.

Charles M. Swoboda

Thanks, John. We are focused on 3 priorities to drive our business in fiscal 2012. Our first priority is to continue to lead the market and drive adoption of LED lighting. We are focused on developing innovative new LED lighting systems and LED components that enable our customers to deliver on more competitive payback versus traditional lighting.

The acquisition of Ruud Lighting has given us a much stronger LED lighting product offering to lead the market and drive adoption for both indoor and outdoor applications. The integration is on track with our first priority to maintain sales momentum across the combined lighting product lines. The response from lighting customers has confirmed that Cree BetaLED is the market-leading product line for innovative LED lighting systems. We are working with our North American sales reps to find the best channel partners for the combined product line, and we should have this process completed within this quarter. The operations team is working to qualify domestic production on our indoor lighting products at our factory in Racine, which should provide some additional cost leverage in our fiscal Q3.

Although we are seeing tremendous growth in LED lighting sales over the last few years, it is clear that we have only scratched the surface of LED lighting adoption, and there is growing demand for LED lighting products that offer innovative solutions and good payback.

We recently announced that our entire line of Cree LED troffer replacements has been qualified by the DesignLights Consortium. We now have the broadest portfolio and highest efficiency LED-based troffer replacements certified by this utility-led organization with unrivaled color quality in this category.

On the LED component side, we took another important step to enable our customers with the launch of our industry-leading TEMPO evaluation services. This is the industry's first complete testing service and is designed to leverage our experience in LED systems design to enable lighting OEMs to speed time-to-market and overcome common design challenges. The initial response has been positive and further illustrates the technical support needed to allow many companies to make the transition from traditional lighting to LED-based lighting.

We also continued to raise the performance bar with the recent announcement of brighter XP-G products, further demonstrating our leadership in high-efficiency LED components for lighting.

Our second priority is to accelerate cost reductions and drive operational improvements to increase the profitability of our business. We made progress in Q1 with a number of cost-reduction activities, including yield improvements and lower-cost product designs that helped offset price reductions. The first LED chip products built on 150-millimeter wafers shipped in Q1, and we continue to work in qualifying additional products over the next several quarters. The conversion is on track. However, the cost benefit is largely a function of factory utilization which remains relatively low.

We currently target cost benefits in the second half of fiscal 2012 as we come off the learning curve, but the impact will vary based on overall factory utilization. We are also targeting margin improvement and operating leverage in the combined lighting product line once we are further along with the Ruud integration.

I want to make it clear that we are intensely focused on growing lighting margins through incremental cost reduction and the release of next-generation products that take advantage of our years of experience in all aspects of LED system design. We believe that the complexity of LED system design provides an excellent opportunity to utilize our strength and innovation, to increase margins during what we target to be an explosive growth cycle over the next few years. We're investing today in the personnel and equipment to make this happen.

Our third priority is to grow the Power and RF product line and expand beyond niche applications. While we continue to make progress in R&D, sales declined in Q1 due to lower overall market demand for solar inverters and high-efficiency power supplies. We continue to invest in product development to enable more mainstream applications, which we believe will drive the market in the future. We are working on a number of new designs with our customers and target growth in the product line in the second half of fiscal 2012.

With the acquisition of Ruud, lighting systems have become a much larger part of our business. As a result of this change, I have decided to make a change to our current organization structure to create more entrepreneurial focus for both our lightning and LED product lines while still taking advantage of our vertical integration. To help achieve this goal, I have created 2 new Executive Vice President positions and eliminated the COO position. Norbert Hiller has been promoted to Executive Vice President for LEDs, and Ty Mitchell has been promoted to Executive Vice President for Lighting. Norbert and Ty have been a critical part of Cree's success for many years and were already leading these product lines, but the new titles reflect their increased responsibility and our enhanced product line focus.

As we look to Q2, our backlog is ahead of last quarter's run rate, although we are still operating in a short lead time environment with limited visibility. There are some concerns about the health of the global economy that have caused other semiconductor companies to forecast a potential slowdown in the December quarter. We see a similar trend in our LED chip and Power product lines. However, we continue to forecast growth in lighting and LED components based on our current sales trends and forecasts. As a result, we target Q2 revenue to increase to a range of $300 million to $320 million, driven by solid growth in lighting from our indoor LED lighting products, BetaLED products and the addition of Ruud Lighting revenue for an entire quarter, flat to higher LED product sales which includes growth in LED components and slightly lower LED chip sales and lower Power and RF sales.

We target Q2 non-GAAP gross margins in a similar range as Q1 at 37% to 38% as we get some benefit from cost reduction programs, which are offset by the competitive pricing environment. We target the increased revenue to deliver higher operating profits as the increase in gross profit is partially offset by incrementally higher R&D, sales and marketing spending. As a result, we target non-GAAP earnings in Q2 of $0.25 to $0.28 per diluted share.

Please note that our non-GAAP targets exclude amortization of intangibles, acquisition costs, stock-based compensation expense and related tax effects.

Looking beyond the short term, we continue to see a path to improve gross margins in the low 40s. The timing will be dependent on internal cost reduction, external market growth and competitive factors. We remain confident that innovation drives payback, payback drives adoption and adoption expands the market for our own lighting products and our customers' products. We target cost reductions from a combination of yield improvements, the conversion of 150-millimeter wafers, new products and increased factory utilization. We believe the combination of these activities leads to improved margins in the year ahead.

We got off to a good start in fiscal Q1, with solid execution in our core LED product lines and the acquisition of Ruud. Our LED components business has delivered solid growth over the last 2 quarters, and our lighting product line has done the same each quarter over the last several years.

The cost per lumen is coming down, which expands the market and improves the opportunity to grow margins. We have an exciting pipeline of new products and technology in both components and systems. The combined Cree BetaLED product line gives us a powerful platform to lead the market and drive LED lighting adoption. We still have work to do on the integration, and the macro economic environment clearly adds uncertainty in the near term. But overall, I believe we are better positioned to lead in LED lighting than ever before.

We will now take analyst questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Chris Blansett of JPMorgan.

Christopher Blansett - JP Morgan Chase & Co, Research Division

First question was tied to the 6-inch transition. I know, Chuck, you gave some commentary that we're on our way. Some of your peers who reported earlier this week kind of indicated they're fully transitioned to 6-inch. So maybe, could you give a little more color on that? And at some point in time, do you expect a big, I guess I don't want to use -- a hockey stick, but inflection point of production from 6-inch?

Charles M. Swoboda

Yes, Chris. So the trick with 6-inch is that we have products that are qualified and are running today in our fab and shipping. That happened in Q1, and we'll qualify and add more products in Q2. The challenge with this though is that converting to 6-inch by itself doesn't give you a benefit unless at the same time, you get good enough utilization. So in other words, you could take the same volume and run it on 6-inch state you had on 4-inch, you're just going to underutilize your factory further than you were. So what we're trying to do is manage how fast we bring those on as well with utilization. And so that is kind of a balance that going forward. So from a technology standpoint, we continue to qualify products pretty much on plan with what we set out at the beginning of the fiscal year. And what we'll have to see is beginning in the second half of the year, where is the best trade-off as to how fast we push the conversion beyond what we're planning for this quarter. And so it's a little bit of wait and see, and really utilization is the key. And since that's a function of demand, it gets back to we've got to drive adoption which drives demand.

Christopher Blansett - JP Morgan Chase & Co, Research Division

The second question was tied to your guidance. So if I just kind of look at the $20 million that Ruud provided in last quarter which is one month, and I just amortize that to the current quarter, it kind of implies -- I should have about $40 million of additional Ruud revenue, which kind of it doesn't seem to imply any real growth from that business. I mean, I just want to understand this because it just seems like it's kind of in the middle of your guidance range, unless maybe the Power side when the chips are down quite a bit, which is offsetting this?

Charles M. Swoboda

Yes. So I think what you have to do is you have to look at -- we had Ruud for about 40% of the quarter. So I think that gives you the ability to kind of calculate what that will look like on a full quarter basis. We're targeting growth in the lighting side and also in components. What we have offsetting that is weakness in chips and weakness on the Power side. So if you look at our range, it's pretty wide. It's $300 million to $320 million. So if you look at the middle of that range, you kind of get a sense what kind of a typical growth we'd be targeting. On the low end, it would say that growth comes in lower and there's maybe more downside in the chip and Power side. And on the high end, you see even higher growth in lighting components. But the math does work. You just got to keep in mind that in the middle of the range, you can kind of see how it comes together with that growth. And then on the low end, what you have to do is factor in the fact that we're probably, in that case, we're factoring an even more pressure on chips and Power there as well as less growth in the component side of the business.

Operator

Our next question in queue comes from Steve Milunovich of Merrill Lynch.

Steven Milunovich - BofA Merrill Lynch, Research Division

Could you talk a bit about any blowback that you're seeing? I've heard that some of your customers are shifting the component orders to competitors. And similarly, there are some pressure potentially on the fixtures side. I know you've expected some of that. I was just curious if you can quantify it at all or indicate how it's coming in relative to your expectations, and how long it might last?

Charles M. Swoboda

Yes, what I would tell you, Steve, is on the component side, it's pretty much what we would've expected. We knew that different customers -- there will be a range of reactions. I'd say overall, it's been generally what it was expected. In some cases, probably even a little positive. I think there's obviously questions. So I think once customers understand the fact that selling components and being in lighting are really 2 objectives. They're separate. They both can coexist. And frankly, we're not in a much different position from many of the other suppliers, I think they get their heads around it relatively quickly. And then in the end, it comes down to, if we delivered components that make their products more successful in the market, they're going to use ours. And if we don't, they're probably not anyway. So I would say it would be pretty much in line with expectations at this point, no significant deviations to negative, and I wouldn't say it's been a lot more positive either, pretty much as expected. If I look at the fixtures side, I think we have definitely gotten a positive reaction from the channel in terms of our channel partners. That's been well received. And I think there are obviously some concerns from some of the other companies that utilize those same channels. But I would say that's pretty much as expected as well. So nothing we kind of didn't anticipate, and we're just working through the integration issues. But from an overall standpoint, I'd say pretty much not much different than what we laid out 8 weeks ago.

Steven Milunovich - BofA Merrill Lynch, Research Division

That's great. And can you talk a little bit about Asian demand? And specifically, what's going on with China street lamp and where that is in terms of potential recovery?

Charles M. Swoboda

Yes, Steve. I don't see China street lamp as a separate item. I really view it as part of the overall market trend right now. There's clearly been since the low of the beginning of the calendar year. We're definitely seeing projects come back. It's not like it's a magical rebound. It's a piece of the business, but it's not any more important to our business than indoor lighting, other outdoor applications, LED lamp market and all of the other pieces. So it's really a piece of that. And what we'd say is China demand last quarter kind of grew in line with the rest of our markets. And the applications were relatively growth amongst all of them as well. So no one stands out. It will be more general market growth. And what I would say is outside of China, we see kind of a similar thing. The one market that's a little bit different than everyone else is Japan is probably a little bit better than the other markets. And that's just a function of them being pretty aggressive on some of their energy efficiency things. So I'd say Asia's generally in line with the same trend we saw last quarter, growth across applications, but Japan is probably a little better just because of some of the specific things they're doing.

Operator

Our next question comes from Dale Pfau of Cantor Fitzgerald.

Dale Pfau - Cantor Fitzgerald & Co., Research Division

Can you talk -- we've now seen 2 quarters of growth in your components business, and you've guided for a flat to up growth in that business in general in spite of having low visibility. Is that business still about 50% distribution? And could you talk a little bit about how you expect that to evolve over the next year? And then I've got a follow-up.

Charles M. Swoboda

Yes. So Dale, what I would tell you is that the disti -- the difference between disti and direct, disti is actually -- their sales have actually been a little stronger than even direct over the last couple of quarters. We've seen growth in both, but it's been very much a broad customer base, broad applications across our distribution partners, across the territories. And when I'm saying growth, I'm talking about really what our distributors are selling to their customers. So it's been fairly broad, and disti would make up more than -- it would be the larger percentage of that. I don't have the exact breakout for you. In terms of what's been going -- Q1, we grew obviously in our Q4, Q1 and we're targeting flat to up again. And what I would say is it seems like a similar trend. So low visibility but right now, based on both what the sales trends we're seeing and the order rates, without a lot of visibility, it still feels like we're on a similar path as Q1. And obviously, we're going to have to watch that pretty closely because when you don't have a lot of backlog, it makes it a little trickier to forecast.

Dale Pfau - Cantor Fitzgerald & Co., Research Division

And you told us last quarter that you expected to burn channel or burn inventory both at Cree and in the channel. Do you expect that to do that again in the second quarter? And then, can you talk about whether ASP pressures are moderating about where you expect? A little commentary there, please.

Charles M. Swoboda

Yes. So what I would say is that we targeted to reduce inventory at Cree last quarter, and we did a good job of that. I think John might have broken that out earlier, but it's a fairly significant improvement. I think we were down $10 million, $11 million in the Cree inventory. As far as the channel goes, we actually weren't planning to reduce channel inventory. I actually thought we were in a pretty good shape, but because demand was pretty strong last quarter, we went ahead with our distribution partners and went ahead and reduced their inventory even a little further than we had expected. So I think we took a fairly conservative view, which makes me feel better about going into this quarter that, that's even healthier than it was. So I think we're in a good shape from inventory. Obviously, inventory only makes sense depending on what demand is. So we've got to keep driving demand of the other side, but at least starting with the quarter, we feel like we're in good shape in both sides there. In terms of the ASPs, the blended ASPs are obviously going up, that's a product mix issue. But if you want to just look at -- let's look at components, look the quarter-to-quarter change, Q1 was similar to Q4. And if you remember, that guidance I gave there was that obviously, the March quarter was pretty significant reduction. Q4 was more normal. Q1 was relatively similar to Q4, and we're targeting about the same in Q2. And that's really a function of the components business and the lighting markets that we're in. So it is a competitive environment. We are seeing reductions, but we're seeing it at a level that's closer to historical level recently than what we saw earlier in the year. And again, we'll have to keep monitoring that because there's not a lot of visibility, but we'll keep an eye on that. But right now, the trend is similar.

Operator

Our next question comes from Harsh Kumar of Morgan Keegan.

Harsh N. Kumar - Morgan Keegan & Company, Inc., Research Division

Quick question. Gross margin looks like it's coming down again. John, 38.8% changed to about 37% and change if I take the midpoint of your guidance. I'm curious if you could help us look at the gross margin decline in the angle of how much of it is Ruud and how much of it is market pressure? Also sort of figuring in your 6-inch new fab and utilization and then I've got a follow-up.

Charles M. Swoboda

Yes, Harsh, let me take a shot at that, and then John can fill us in if I don't get it right. So last quarter, we said when we updated the targets that we'd be in the low end of our range, and we came in, which was originally 38% to 39%. So it came at 37.4%, that's within the predictability of our business. I feel like that's in line with the targets. And really, there's 2 things. What we had was -- is that we had costs from Q4 flowing through in Q1, so that put a little pressure on the margins. But second, the utilization, it came up a little bit but not very much, so we're still running fairly underutilized. So those will be 2 of the pieces that affect kind of the core LED chip and components business. Then on the other side, we knew that with the addition of Ruud that it would move down slightly because the Ruud margins are a little bit below the corporate average. They're better than our internal LED product line but -- our LED lining product line but a little bit below, and so those came in pretty close to where we targeted. So I would say we're a little on the low end of that but generally in line with what we expected. And for Q2, we're targeting kind of the same range, 37% to 38%. So what we're suggesting is that I don't think we're going to get a big benefit from utilization in Q2. At the same time, I think we'll get enough benefit in cost reductions and yield improvements that will offset the price reductions, not only in our components business but in our lighting product line as well. And really, the goal there is to make incremental progress there each quarter.

.

Harsh N. Kumar - Morgan Keegan & Company, Inc., Research Division

Got it. If I can follow-up on that [indiscernible] . I think the ultimate [indiscernible] was that Ruud's margins are pretty easily fixable, if you will, in a short period of time and can be brought up to -- up to snuff at your own business. I guess your answer back to the question when do you think you'll be in a position to have comparability across Ruud's margins in your own business?

Charles M. Swoboda

Yes. I think -- well, look, I think it applies to all of our lighting systems. Remember, we have a large indoor lighting systems business as well. I think the target for both of those is that there are cost reductions and new product designs that I think are critical to driving that business. So as we come out with new products, we're not just increasing performance, but we're also looking for ways to fundamentally reduce the costs. That reduces the price for the customer, which is important because that drives adoption because you get better payback. And on the other side, we're trying to reduce the cost because we believe we can increase our margins. You know I haven't moved off our goal to get the company back to the low 40s. That means that we have to get the lighting systems business and the components business and the chip business back in the near of that range, and I think we can do it on both. But right now, with the fact that we're running a factory with relatively low utilizations and we're still in -- we're 2 months into the integration of Ruud, I think it's going to take us a few quarters to get things coming together here, get some of our indoor products transferred to what we're seeing in those types of things before we see -- before we can get back down that road. So we remain committed to the goal, but it's going to take us a few quarters start to make progress just because we are running this thing with a relatively underutilized factory and a pretty tough demand environment in terms of lack of visibility. So I think we're on the right track, Harsh, but it's going to take a little while.

Operator

Our next question comes from Andrew Huang of Stern Agee. Your line is open.

Andrew Huang - Sterne Agee & Leach Inc., Research Division

Can you first give us a ballpark percentage of your wafer starts at 150-millimeter?

Charles M. Swoboda

Andrew, I don't have a percentage for you, but it was the first quarter, so it's a relatively small percentage in Q1. It was enough to run a couple of different product lines, but it's not a large percentage. I don't have the specific number in front of me.

Andrew Huang - Sterne Agee & Leach Inc., Research Division

And maybe instead, can you give us a sense of where you might be exiting this fiscal year?

Charles M. Swoboda

Yes. So the goal was to exit the fiscal year with over -- at least a majority of wafer starts on 150. Depending on what demand did, we might accelerate that, and where utilization is, we might adjust that a little bit either way. But the target has been, really for the last the last 6 months, the target has always been to exit the fiscal year and with a majority of wafer starts on the 150-millimeter.

Andrew Huang - Sterne Agee & Leach Inc., Research Division

Okay, great. And then, let's see. Maybe you could talk a little bit about your direct attached chip technology and the traction you're getting with components using that chip technology?

Charles M. Swoboda

Yes. So we have a chip that came out that's been released in products for -- I think, we're in our second quarter now. I think it's been out, and what it does is it's given us some advantages in terms of allowing us to deliver better performance with less chip area. And so that's been an important product. It's really only been in the market really going in about 6 months now. And normally when we introduce a new component, there's about a 9 to, 9- to 15-month window to get designed in. So we have had some initial success. What it does is it basically allows us to deliver more performance at a lower cost at a better margin. It's a relatively small percentage of the business today, but it is an important product. And I think we'll go -- we'll be introducing more products with that technology in the quarters ahead, so I think it's an important strategy for us. And at the same time, we will offer that chip for some of our customers on the chip side as well. So I think it will give us some advantages there. So again, the innovation doesn't stop. We continue to look for new ideas, and this is one of those ones that basically it's more lumens per chip area, and that's a good thing.

Operator

Our next question in queue comes from Ahmar Zaman of Piper Jaffray.

Ahmar M. Zaman - Piper Jaffray Companies, Research Division

The question -- my first question is about your acquisition of Ruud Lighting and any -- think about synergies, cost synergies specifically on OpEx as we go forward with integration. You guided for an OpEx in the range of $95 million on the GAAP, $75 million -- $78 million non-GAAP. [indiscernible] next few quarters as you [indiscernible] do you integrate Ruud Lighting with some of -- Ruud with Cree?

Charles M. Swoboda

Yes. So what we originally targeted was that the most that we're looking for is not to put the 2 together and take costs out but to take the costs between the 2 and increase revenue, right? So there are synergies, but it's on the top line by using the resources together. Right now, this will be the first quarter we have their core expenses in our numbers for the whole quarter. And we have a little bit of extra costs built into Q2 just because the integration does have some incremental expenses. I think as we get into the second half of our fiscal year or the first half of next calendar year, we would target that the revenue synergies would start to drive some leverage on the OpEx line because we would expect to have to -- just frankly the rate of investment on OpEx should slow relative to revenue. Now, will that happen in our fiscal Q3 or Q4? Q3 is a seasonally slower quarter especially in the outdoor lighting market, so I think maybe not necessarily there, but we would expect to see it by the end of the fiscal year. Again, short term, we're really focused on integration, but as we get into the second half of the fiscal year, you should see that. The other thing we're targeting is that there's OpEx avoidance. So one of the things we're also looking is to transfer some of our indoor products that were being built here in Durham and manufacture those in the factory in Wisconsin, which should also give us some benefits there because we have a lower cost structure in that facility. So you will see that. Again, as I said earlier, that's more of a Q3-type benefit for the indoor product line, but we do have some things coming, but they're going to kind of come on incrementally over the next several quarters.

Ahmar M. Zaman - Piper Jaffray Companies, Research Division

And then my follow-up is on phosphor and phosphor prices. We're hearing phosphor prices are going up due to rare earth prices. Are you impacted by that at all? And how should we think about your exposure there?

Charles M. Swoboda

Yes. So if you look at the rare earth thing, obviously, there is some effect on phosphors. I would tell you that in the scheme of what does it cost to make an LED, it's a relatively very small incremental cost right now. So I don't think it's a major cost driver. What it is interesting though is it is a huge cost driver in the fluorescent lamp business. So what we have seen is that fluorescent lamp prices had gone up in pretty much around the world. And so what that does is it actually makes the cost of fluorescent lighting more expensive and actually makes the payback on LED versus fluorescent better. So there's kind of a hidden benefit there which is although there might be a slight increase to phosphor cost to an LED company, there's a relatively large increase to the traditional fluorescent guys, which I think is a benefit to driving LED lighting adoption in the year ahead.

Operator

Our next question comes from Joshua Paradise of Morgan Stanley.

Joshua Paradise - Morgan Stanley, Research Division

You said a couple of times that utilization is still lower than you'd like. Can you quantify a little bit more where utilization is now, and how much it's improved since last quarter?

Charles M. Swoboda

Yes. So generally, I don't break out specific number, but I can get you there kind of on a relative basis. So in our Q4, at the low point, we were down as low as 60% in some parts for the factory. Last quarter, we've made a slight incremental improvement if you look at it across the quarter. But on an average basis, it's very incremental, the increase we saw in Q1, and we're only targeting another small increment in Q2. Obviously, where we'd like to be is when the business is running back up close to that 90% utilization level, we get a whole lot more leverage. But that's not likely to happen in this quarter or next. So I think where we think about it is, Q4 was the lowest utilization we had. We're seeing a little bit of improvement in Q -- we saw a little bit of improvement in Q1, a little bit in Q2, but frankly, no leverage really yet. And that's a function of how much more we can drive demand.

Joshua Paradise - Morgan Stanley, Research Division

And as a follow-up to that, if I can. You've talked a lot in the past about how your different specific LED components for different types of lighting. So can you talk about which of those components you see more strength in and which product areas and whether the capacity that you have is fungible so you could produce either the XP-Gs or the XP-Es or the MT-Gs, anywhere in the factory or whether that's dedicated capacity?

Charles M. Swoboda

Yes. So if you think about it from a capital standpoint, the vast majority of capital goes to make the chips, not the packages. So the chip capacity is fungible. We can make the chips for all those different flavors with the capacity we have. When it gets in the components, a lot of the basic packaging operations can be intermingled so die attach, wire bond. But when you get into things like the testers, there is some specific capacity. So what I would say is the vast majority of the capacity is fungible, but there are some specific pieces that are not. But I'd say on average, it's probably 80-plus percent of it can be used for whatever, if you look at it across the factory for making chips through components. In terms of where we're seeing the demand, we're actually seeing success pretty much across the product line. And so XP-G continues to do well. The HEW XP-E product, which is the high-efficiency White product, is gaining traction. We still see strength in the XP-E product. We have our ML-E and ML-B, which are more mid-power. We've seen an increase in both of those for more of the indoor lighting applications, where you're going to spread the light out. We're getting some traction on our CXA which is an array, which goes in a very different kind of market application. And then we have our multichip EasyWhite products, which if you look at the MT-G, it's probably a good one that we designed really for like MR16-type applications. And that's having success, so it's really pretty broad. I would say it would be hard to put any one of those. Generally speaking, we're having some success across the product line, and it kind of varies from quarter depending on which applications are ramping.

Operator

The next question comes from Carter Shoop of KeyBanc.

Carter B. Shoop - KeyBanc Capital Markets Inc., Research Division

I wanted to clarify a point to start. In response to the question from a previous caller, you mentioned that it was going to take a few quarters to improve gross margins. Was that comment related to the LED fixtures business or the entire company including the LED products?

Charles M. Swoboda

Yes. I think what I was trying to describe earlier is when do we get the leverage from things like on the chip side, when do we get leverage from utilization and cost reductions that's faster than price erosion? And then on the lighting side is when do some of the new products get and introduced and they start to ramp up? My real point is that obviously for Q2, we're targeting flat margins, so those are the targets we have out there. And I'm really not getting a specific quarter when it starts to ramp up. What I'm really suggesting is there are things we're doing on both the chip and component side and the lighting side that I think will give us that leverage. That leverage is a bit of a function of how fast do we get new sales for the new lighting products on one side and how fast does the -- do we ramp up the new products in the chip side, as well as increased utilization. So not trying to provide any specific quarter when that starts to happen because the really only guidance we have now is for Q2. And given the visibility, it's hard to give you beyond that. But really try to give a sense for there's plenty of levers out there that we're focused on that we think will drive and improve margins, but the timing's hard to call right now.

Carter B. Shoop - KeyBanc Capital Markets Inc., Research Division

That's helpful. And then a question here. Can you walk us through some of the opportunities and some of the challenges Cree's going to have in building out your sales channels, the OD fixtures business. And in particular, can you touch on how the SG&A is going to change a little bit as you use more of the agent network? And then also, what about future acquisitions in the fixtures side to broaden out your product offering?

Charles M. Swoboda

Yes. So future acquisitions, we're really not focused on that right now. I think our focus is integrating the one we have. I think we have a very good core portfolio. And unless something changes, we're going to be pretty focused on that integration for the foreseeable future. And as far as building out the channel, so what we have today is, is that Cree had a channel of agents and reps, and the BetaLED product line had its own agents and reps. So we're going through a process where pretty much in each market, we now have to pick which rep would be the best for the combined product line. So we're going through that process. In most cases, we'll pick one or the other. In some cases, we may go to a third rep just because with the combined product line, we can stay even better with them. And in some cases, we may have some unique relationships where we continue to have parallel just because they're focused on very different applications. What that means is that does add expense on the sales expense side because you have those agent rep commissions. That's not the whole business. Within that, we also have our Home Depot business, which doesn't go through that, so it has a different cost structure. We sell directly to Home Depot. And then we have what I'll call national accounts. And national accounts have a different margin structure as well where we're much more involved in the sale of those. And we have that process in place both for our indoor product line, and for certain markets on outdoor we do the same thing. So it's a little hard to -- if it was all agents and reps, you could predict a consistent number, but because of those other channels, we're going to see some variation. And depending on where the growth is, if it's more on the retail channel or if it's going to be more through national account, it's going to have some variability each quarter. But overall, you're right. What you'll see is sales expense on the lighting side generally adds, grows a little faster than we might have seen it in the past in the components business. Again now the mix is going to change that a little bit and so I think it'd be premature to pick one number for that right now.

Operator

The next question comes from Jed Dorsheimer of Canaccord.

Jonathan Dorsheimer - Canaccord Genuity, Research Division

Chuck, I guess, so first question is if I take the $20 million of the Ruud for 40% of the quarter, annualized, that gets me to $200 million, which I think is consistent with what you said when you acquired the company about, you said a little over $200 million in sales. So I guess my question comes down to the margin of the Ruud product line. And if we look at the margin guidance of Ruud being slightly dilutive, does this -- did this already include an account for the transfer margin? And if not, then Ruud must have grown fairly significantly in the quarter, which my first question is then why isn't it growing next quarter? And then I have a follow-up.

Charles M. Swoboda

Yes, Jed, so when we told you that Ruud was slightly dilutive to the corporate average that included the chip, the LED component margin coming out of that, right? So basically, we had factored that in. So that's what its margin is on an integrated basis without them having to pay the margin on the component, so that was already factored in. So what you can see is if we added revenue that was slightly below the corporate average, then that would make sense that our margins came down a little bit last quarter. What it also says is that if we're targeting margins at the same level this quarter and we're targeting growth in lighting, the only way that math works is if we think we can make cost reductions and get benefits both on the lighting side and the component side to pay for that, right? Because if their margin is slightly below the corporate average and you add more of it, it should bring it down, but we're targeting it to be in the same range, which essentially implies that we think we can do some things to improve costs this quarter that will offset that.

Jonathan Dorsheimer - Canaccord Genuity, Research Division

Fair. And then as my follow-up, if we look at other lighting companies, so on the fixtures side, Acuity, Cooper, Hubbell, to name a couple, even Zumtobel that you're partners with, if we look at their margin structure, it's actually, I think, the low 40s for some of the LED product is what we've seen out of them. So why, I guess, aren't Ruud's margins higher, particularly now that you are vertically integrated and have the advantage where those other lighting companies don't have that advantage. And my understanding of Ruud's business is that it was more of a direct and didn't have some of the same channel or national account channel costs associated with that. Could you just help me under -- it would seem as if it should be pretty easy to get Ruud's margins up to above the component margins.

Charles M. Swoboda

Yes, well, I wish it was easy, but let me walk you through what the difficult -- and not the difficulties, they're really not difficult. It was the math today and what are we doing about it. So if you look at Ruud's business, remember that their BetaLED product line was not sold direct. So their LED product line was sold. It was all basically part of the BetaLED brand, which was sold through traditional agents and distributors, so it had sales commissions built into it. So that business was -- they also had a separate business that sold traditional technology. That is really the original Ruud Lighting business that's sold direct, and that had a lower sales cost structure on it. But that really the traditional products, and that's a relatively small percentage of the business today. The business is really being driven by the BetaLED product line, which is where all the growth is. So the sales expense does count there because it has that traditional lighting agent in channel network. The difference in margins though if you look at it is, I think if you look where Ruud has won with BetaLED products, I think you have to look at the Cree products as well, our own internal lighting product line which is also below our corporate average. We have really gone after some mainstream applications and gone head-to-head with the traditional technology. That is not how the other companies approach the market. So when we're out competing for a troffer, we're not competing with LEDs as the more expensive alternative. Our troffer product goes head-to-head with fluorescents and competes directly with an architectural lay in troffer, not only in terms -- much very close on price and much on payback. So I think we're pushing the limits of the market more than others to try to drive adoption. And so I think the other companies have taken more of a premium product approach to their LED products, and so I think that's where as you see the difference at least on the LED front. As far as their traditional businesses go, I think if you look at those models, those are relatively fully depreciated factories building those products, and they've done a good job of getting them into the low 40s. But that's also the same reason why I don't think there's any reason we can't deliver LED products in a similar range. The difference is we're coming out with very new products that are changing very quickly, and we've got to get to those points where those product margins that enable adoption also deliver the profit levels we're looking for. So we're really looking for those price points, and I would say Cree is probably -- Cree and Beta have worked a lot harder on a very mainstream applications to try to turn those on. So we're going after probably more of the cost-conscious applications.

Operator

Our next question in queue is from Mark Heller of CLSA.

Mark Heller - Credit Agricole Securities (USA) Inc., Research Division

Most of my questions have been answered. But John, I was wondering if you could estimate the margin penalty in terms of percent or basis points from underutilizing the LED chip fab?

John T. Kurtzweil

Yes, on that one, I can't give you a number there. It depends on where it ends up on what you say is fully utilization. But what we do believe is that as we increase -- as Chuck has said earlier, adoption drives utilization. And through that utilization, we do expect to get back into the low 40s at some point with the margins, and that's really driven from utilization. So that's how we're going -- part of how we're going to go there.

Charles M. Swoboda

Yes, and maybe to add a little color to that, if you think about, look at our business where it was a year ago when our factory was completely full, and now remember those 2 effects, right? You got pricing on one side, and you got cost on the other. But it gives you some idea of how much cost leverage there is. You have to also realize that part of that benefit a year ago was also a different pricing environment. But you get some sense for the order of magnitude if you just look at Cree's margin changes over time.

Mark Heller - Credit Agricole Securities (USA) Inc., Research Division

Any color you can give also on the LED business as far as the split between chip and component revenues at this point?

Charles M. Swoboda

Yes, what I would tell you is chips declined again as a percentage. So all of the growth last quarter from an LED product line was in the component side of the business, and chips was actually down sequentially. So I can't break it out but I can tell you it's declining again as a percentage. And we're really getting down to pretty much the core applications where I think we have some pretty strong customer partner relationships.

Operator

Our next question is from Daniel Amir with Lazard Capital Markets.

Daniel L. Amir - Lazard Capital Markets LLC, Research Division

A question here on Ruud Lighting again. Part of the business is non-LEDs in Ruud. So how should we be looking at that business going forward? Is that a business you're going to defocus? Is there a risk there that business falls off? I mean, obviously, all the growth is in BetaLED, but how should we look at that other part of the business?

Charles M. Swoboda

Yes. So the way to think about it is, is that this is a business where they've gone through a pretty dramatic transition over the last 3 or 4 years. So they went from 100% non-LED to at the end of June, they were over 60% and that's where all the growth is, that's LED-based. What you should expect is we make a number of products that serve certain market niches that frankly we don't offer an LED version today. I think over time, what you'll see as we will come out with LED products that will address those market segments, and it will naturally replace the traditional lighting that we're still selling. With that being said, I think that business probably has a long tail. It will probably go down slightly year-over-year as we bring up the LED products. But my guess is for the next few years, we'll continue to make some of those products and support them just because there are legacy installations out there that people are going to want support for. But really, I think it's a relatively slow, consistent decline over the next couple of years that should be really far out, far overshadowed by the growth in the LED side.

Daniel L. Amir - Lazard Capital Markets LLC, Research Division

Okay. And my last question is just in terms of kind of the industry outlook at the moment, kind of what's your best guess kind of where we are in terms of the industry recovering here after a very tough year in terms of pricing? Do you still expect it to remain a challenged environment here for the next number of quarters? Or what needs to change?

Charles M. Swoboda

Yes, we look at it -- the industry, if you're talking about the LED business generally, which includes all the different applications, it's a tough market out there. Obviously, the back lighting segment is a lousy segment to be involved in right now. And overall, what you generally have is there's more supply than there is demand, so you have a lot of companies with short lead times and underutilized factories. So I expect that until demand grows to the point when those factory utilizations start to increase not only at Cree but across the industry, I think the broad LED market is going to continue to be a challenging pricing environment. Now Cree, since we're so heavily focused on the lighting segment, it is highly competitive. We have a number of competitors in different segments out there that we're having to compete with for new designs. But I would say the difference is, is that we have the advantage that if we can drive adoption, we can get growth even on a relatively lousy economic environment. And so if this adoption goes fast enough, that gives us some growth opportunity. So I think it provides a better environment than the broader market. With that being said, we don't have great visibility. It is competitive, and we cannot stop innovating and pushing the limits if we want to keep being in the leadership position. So I think we have a lot of work ahead of us. When it might change is a function of when demand changes. And the piece we can affect is LED lighting, and so that's where we're focused on. Broad market, I don't have a good answer for you there.

Operator

And our final question for today's call will come from Satya Kumar of Credit Suisse.

Farhan Ahmad

This is Farhan Ahmad on behalf of Satya. I had a quick question regarding your street lighting. We have recently heard a lot of positive things on LEDs getting increasing traction in street lighting. Just wanted to hear your thoughts on how that market is, and what your expectations are of the world business for next year. And also if you could elaborate if the stimulus money had anything to do with the strong demand this year and there may be some -- as stimulus money runs out, there may be some downside to it.

Charles M. Swoboda

Yes. So what we would see is in street lighting, which is really for our systems business is primarily North America but also some European business. What we've seen is we continue to see new projects. They typically are municipal projects. And as new LED products come out that are higher performance and lower costs, the payback get better, and we've been successful continuing to win new projects. So I would say that, that market looks relatively steady right now. There is still new projects coming out and we're bidding on them. Obviously, we have to continue to be successful there, but so far, that's done pretty well. And I would say that municipal street lighting is an important market for us in the year ahead. As far as how did the stimulus affect that? We actually -- our estimate is that very -- only a very small percentage of our outdoor lighting has been affected by stimulus. So despite all the talk, it was a relatively small percentage of the business, and so we don't see a significant effect on that. What we think it's more important is the ability to keep bringing the payback down because as that payback comes down, you open up more and more municipalities that have the opportunity to take advantage of it because if the payback is quicker, more people are willing to finance it and take it. And if you look at adoption today, I think there's a -- I think I saw the number the other day that there's over 200 million street lights in North America, and only a tiny percentage had been converted. So I think it's still a great opportunity and one that we're going to remain focused on, in addition to a lot of other outdoor and indoor application.

Operator

I would like to turn the program back to our presenters for any concluding remarks.

Raiford Garrabrant

Thank you for your time today. We appreciate your interest and support and look forward to reporting our second quarter results on January 17. Good night.

Charles M. Swoboda

Thank you.

Operator

Ladies and gentlemen, thank you for joining today's conference. This does conclude the program, and you may now disconnect.

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!

Source: Cree's CEO Discusses Q1 2012 Results - Earnings Call Transcript
This Transcript
All Transcripts