Shares of Cree fell as much as 19 percent in after-hours trading after the LED lighting company announced that revenue for its fiscal third quarter will fall significantly short of expectations.
The Durham-based company said that, based on preliminary estimates, revenue for the quarter ended March 27 will be about $367 million – or $48 million below the midpoint of its revenue target. Cree’s previous guidance anticipated that revenue would range between $400 and $430 million.
CEO Chuck Swoboda told analysts during a conference call that the shortfall was due to disappointing sales of lighting products.
Cree also estimated that adjusted earnings per share for the quarter will be 13 cents to 15 cents. The company previously had targeted adjusted earnings per share of 22 cents to 29 cents.
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Sales, Swoboda said, were hindered by: a disruption in customer service stemming from conversion to a new software system; delays in new product introductions, which prompted some customers to delay their projects or switch to other products; and “weaker market conditions than forecast.”
“We are accountable for these results and we have taken action to improve,” Swoboda said.
The company also announced that Norbert W.G. Hiller, who was executive vice president of lighting, has stepped down from that role and is now leading business development efforts.
David Elien has been named interim general manager of commercial lighting while the company conducts a search for Hiller’s replacement. Elien is senior vice president of business operations for lighting, according to his LinkedIn account.
Swoboda said that the pace of orders for lighting products in March seemed to be improving. In addition, he said, the problems created by the new software system are mostly over and “new product momentum is improving.”
“I feel the business is on the right track overall,” he said.
Cree reported that revenue for other segments of its business, including its power and radio frequency division Wolfspeed, were in-line with expectations during the quarter.
In addition to selling LED light bulbs and indoor and outdoor LED light fixtures, Cree makes components that other companies use in LED lights. In addition, its LEDs illuminate mobile phones, televisions, electric signs and car dashboards.
Earlier Tuesday, Cree shares closed at $29.05, down 17 cents. The company’s shares have risen 9 percent this year.