Cree's booming LED lighting business is just gaining momentum, the company's top executive told shareholders and employees Tuesday morning.
LED lights, which use less energy and last longer than traditional bulbs, 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 employs about 4,500 people worldwide, including more than 2,500 at its headquarters and manufacturing facility in Durham.
Cree 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 and its revenue growth in a description of LED lights as one of 10 top green innovations.
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 who want to build their own lights using Cree's LEDs, Swoboda said.
LED lights cost more than traditional bulbs, but they save money in the long term. The costs continue to fall as manufacturing becomes more efficient, Swoboda said.
Capturing more of the global lighting market will require a lot of investment, he added. Cree has about $1.1billion in cash. Swoboda said he might consider buying back Cree's stock or paying a dividend, but his focus for now "is making investments to drive the growth of the company."
Swoboda mentioned examples of where Cree's LEDs are used: streetlights in Los Angeles and at Boston's Logan International airport, in retailers such as Walmart and Chipotle. Walmart, in particular, is helping to validate that the lights deliver energy and maintenance savings, which is spurring other retailers to make the switch, Swoboda said.
Locally, Cree products 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 LEDs and lights are sold to commercial customers. But one light is 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 elected eight board directors.
Cree shares, which have nearly tripled in two years, fell 25 cents today to $51.15.
