Earnings Preview: Cree Inc.

Cree (CREE) is expected to report Q4 earnings after the close Tuesday with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 9c for EPS and $130.92M for revenue, according to First Call. On the last earnings call, management provided Q4 EPS guidance of 12c to 14c and revenues of $129M to $133M.

Analyst Views

On August 5, Morgan Keegan upgraded Cree to an Outperform rating based primarily on the recent stock pull back and its belief that several of the issues surrounding Cree are mostly priced in at current levels. The firm thinks that Cree should be in a position to meet Street expectations for the June quarter.

Looking forward to the September quarter, the Street is looking for 10c on $137M (up 5% sequentially) and Morgan Keegan thinks that Cree should be able to issue guidance that is in-line with EPS expectations and possibly come within $1M on the top line. Morgan Keegan believes Cree's core business remains stable and is poised for growth in the September quarter.

Key issues for the conference call: Progress in lowering manufacturing costs and operating expenses; commentary on the company's efforts to move production offshore.

Additional key issues: Forward guidance; commentary on the LED market and Cree's potential and market share; commentary on the solid-state replacement lights market for residential lighting; an update on COTCO; and any comments regarding a possible takeout of Cree given the speculation this quarter.