- Down in AH trading yesterday after posting mixed FQ4 results and issuing in-line FQ1 guidance, CREE is singing a very different tune today. Low expectations - shares went into earnings down 67% from their Aug. 2013 peak - are helping out. So might short-covering: 20.8M shares (nearly 1/5 of the float) were shorted as of July 31.
- On the earnings call (transcript), CFO Mike McDevitt noted a recent patent-cross-licensing deal with Taiwanese LED chipmaker Epistar will provide a lift to FQ1 gross margin. CEO Chuck Swoboda promised the consolidation of two North Carolina LED fabs will provide a boost in future quarters.
- Swoboda also noted Cree's LED lighting growth is now primarily being driven by commercial lighting rather than consumer bulbs. "I think our [lighting] margins overtime will merge towards our commercial margins and if you look at that market over the past three to five years, the commercial lighting industry generally, once you get to the about a billion dollars, they typically have mid-thirties gross margins and low double-digit operating margins and so, that would be our near to mid-term goal as to get the business at that level." For reference, Cree's FQ4 lighting gross margin was 24.8%.
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FQ4 results/FQ1 guidance, details