Durham-based Cree gets serious about acquisitions

dranii@newsobserver.comApril 22, 2014 

LED lighting company Cree, which has $1.2 billion in its coffers, is scanning the horizon for possible acquisition targets.

“This is not an imminent thing,” CEO Chuck Swoboda said during a conference call with analysts Tuesday, but “it is something we are looking at more seriously than we have in the past couple of years.”

Swoboda said the Durham-based company has begun to look at acquisition possibilities across all of its product lines.

“While we are very comfortable with our current product portfolio, we believe some opportunities may emerge over the next 24 months to leverage the Cree brand as the shift to new technology accelerates and the industry begins to go through a consolidation phase,” he said.

Cree makes LED light bulbs and indoor and outdoor light fixtures as well as components that other companies use in LED lights. Its LEDs also illuminate mobile phones, televisions, electric signs and car dashboards.

Cree hasn’t made an acquisition since August 2011, when it acquired Wisconsin-based Ruud Lighting for $525 million. That deal significantly expanded Cree’s lineup of outdoor lighting fixtures.

Swoboda’s comments to analysts came during a discussion of the company’s fiscal third-quarter earnings, which were released after the markets closed Tuesday.

Cree shares fell as much as 10 percent in after-hours trading despite reporting a 16 percent jump in revenue and a 17 percent increase in net income.

The quarterly net income was slightly better than Wall Street was expecting, but revenue was a bit less than anticipated. Gross margins also fell short of estimates.

Cree generated $405.3 million in revenue in the quarter that ended March 30. Analysts had projected $407.3 million.

Net income, after excluding stock-based compensation and amortized goodwill, totaled $47.7 million, or 39 cents per share. Analysts polled by Bloomberg News had projected 38 cents per share.

Swoboda called it “a solid quarter.”

“These results once again demonstrate our ability to deliver strong operating results while continuing to make longer-term investments in new technology and building the Cree brand,” he said.

Last month Cree unveiled its SmartCast Technology, an easier-to-use system for automatically turning off lights when a space isn’t occupied and for dimming lights when sunlight is streaming through windows. It can reduce energy use for business customers by 40 percent – in addition to the up to 50 percent savings already provided by LED lights compared to conventional lighting.

Also in March, Cree launched a new LED bulb that equates to a 100-watt bulb and cut the prices of its other LED bulbs sold exclusively at Home Depot by up to 23 percent.

Cree is forecasting that fiscal fourth-quarter revenue will fall between $430 million and $460 million, whereas analysts were projecting $435.1 million.

Cree has more than 2,400 workers in the Triangle and more than 6,500 worldwide.

Earlier Tuesday, Cree shares rose 49 cents to $58.05. Its shares have fallen 7 percent this year.

Ranii: 919-829-4877

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