What Cree is calling "the LED lighting revolution" sparked the company to a 78 percent increase in quarterly revenue and net income that was more than four times what it earned a year ago.
Even though the Durham company's robust performance exceeded Wall Street's consensus expectations, Cree shares fell as much as 7 percent in after-hours trading.
The stock has been rising in recent weeks, said analysts who speculated that some investors were betting that the company would blow past even the most optimistic estimates - which it didn't do. Consequently, Cree managed to both exceed estimates and disappoint some investors.
"Maybe expectations were a little bit ahead of themselves," said Seth Dadds of GARP Research. Daniel Amir of Lazard Capital Markets called it "a very solid quarter."
Cree's light-emitting diodes, or LEDs, illuminate car dashboards, cell phones, televisions and signs and are used for interior and exterior lighting - products that are driving the company's growth. Cree makes its own light fixtures and bulbs and supplies LEDs to lighting companies.
The company, which employs about 1,800 workers at its headquarters in Durham, announced after the markets closed Tuesday that it generated $234.1 million in revenue in the fiscal third quarter, which ended March 28.
Profit, after excluding stock-based compensation and amortized goodwill, was $51.3 million, or 47 cents per share, versus $11.8 million a year ago.
"The LED lighting revolution continues to gain momentum, and we are well-positioned to continue to grow," CEO Chuck Swoboda said during a conference call.
Indeed, Cree projected that the good times will continue to roll during the quarter that ends June 27. It forecast that revenue will range from $255 million to $265 million. Profit, after excluding stock-based compensation and amortized goodwill, is projected to be $53 million to $56 million.
Will invest in R&D
John Kurzweil, Cree's chief financial officer, told analysts the company plans to boost its investment in research and development as a percentage of total revenue over the next few years -- event as it plans to maintain profit margins at or near the current level.
"It's our innovation that has driven our growth," Swoboda said in an interview.
"We think these new products really drive LED lighting adoption."
Cree shares closed at $82.17, up $2.10, in regular trading. Its shares have tripled in the past year.
