Cree's booming business in the LED lighting market is just gaining momentum, its top executive told shareholders and employees this morning.
LED lights, which use less energy and last longer than traditional bulbs, currently control about 4 percent of the $108 billion annual market for lights and lighting fixtures worldwide, said CEO Chuck Swoboda, during Cree's annual meeting at its Durham headquarters.
"That means 96 percent of the opportunity is still in front of us," he said. "We have to continue to innovate, drive adoption and lead the market."
The company is expanding its manufacturing in Durham and China to handle surging demand. In the past year, Cree has added more than 600 workers in Durham. The company now employs about 4,500 people worldwide, including more than 2,500 at its headquarters and manufacturing facility in Durham.
Cree also is attracting attention from politicians and the national press as an example of a home-grown, green technology company. Newsweek magazine last week mentioned the company in its description of LED lights as a top green innovation.
Analysts expect Cree's annual revenue, which reached $867 million last year, to easily pass the $1 billion mark for the first time this year. Much of the increase is being driven by LED lights.
Cree's priorities for the next year include building its brand as the market leader in LED lighting, reducing costs for LED lights and fixtures, improving the technology, and helping customers that want to build their own lights using Cree's LEDs, Swoboda said.
Capturing more of the lighting market will require a lot of investment, he added. Cree has about $1.1 billion in cash. Swoboda said he might consider stock buybacks or a dividend at some point in the future, but his focus for now "is making investments to drive the growth of the company."
Swoboda mentioned various examples of where Cree's LEDs are being used: streetlights in Los Angeles and at Boston's Logan International airport, in retailers such as Walmart and Chipotle, and more. Walmart in particular, is helping validate that the lights deliver energy and maintenance savings, which is spurring other retailers to make the switch, Swoboda said.
Locally, Cree's LED can be found in streetlights and parking garages in downtown Raleigh and Durham, on the Raleigh Convention Center's Shimmer Wall, and in the digital sign inside the RBC Center.
Most of Cree's LED and lights are sold to commercial customers. But one light is now reaching consumers directly. Home Depot began selling Cree's recessed ceiling light online for $49.95 in August and has since rolled out the EcoSmart brand light in most of its stores.
"It's exceeding Home Depot's expectations," Swoboda said, without providing specifics. "There is quite a lot of consumer demand for a $49.95 light, even if it replaces a $2 bulb, if they understand that it will last for 20 years and save money over the long run."
At the annual meeting, Cree shareholders also elected eight directors for the company's board.
Cree shares, which have nearly tripled in the past two years, fell 25 cents today to $51.15.