Business

Cree’s quarterly results beat Wall Street forecasts

ASSOCIATED PRESS

LED lighting company Cree posted quarterly results that easily exceeded analysts’ expectations, but its revenue continued to decline.

Cree shares rose in after-hours trading Tuesday.

CEO Chuck Swoboda also told analysts during a conference call that the company is gearing up to produce exterior automotive lights, such as headlights, tail lights and turning signals. The Durham-based company expects to make its first LED light for the automotive market available by the end of June.

Cree has been a supplier to auto manufacturers for more than two decades – most notably, its LEDs are used to illuminate car dashboards – but up to now it hasn’t made complete lighting products for the industry.

Swoboda said in an interview that LED tail lights and daytime running lights already are a small but growing part of the automotive market, and LED headlights are also starting to make inroads.

The company reported that revenue for its fiscal second quarter totaled $347 million, down 12 percent from $394 million a year ago. But revenue was ahead of the $326.3 million anticipated by analysts surveyed by Bloomberg News.

Cree suffered a sales shortfall last spring when its conversion to a new software system disrupted its customer service, and the company said at that time that rebuilding its sales would take time.

Cree sells LED light bulbs and indoor and outdoor LED lighting fixtures, as well as components other companies use in LED lights. Its LEDs also are used to illuminate mobile phones, TVs, electronic signs and other products.

Adjusted net income for the latest quarter totaled $30 million, or 30 cents per share, versus the 11 cents per share projected by analysts.

Cree announced last month that its revenue and net income would be boosted by a settlement of its patent infringement and false advertising complaints against a major competitor, Feit Electric, and its Taiwanese supplier.

“We made progress in fiscal Q2, as commercial lighting revenue increased several percent sequentially, due to increased demand across several product categories,” CEO Chuck Swoboda told analysts during a conference call.

He also said that although consumer lighting revenue declined in the quarter, margins improved.

“Consumer feedback on our new LED bulbs has been positive, and our premium strategy has helped us improve profitability in this product line,” he said. “While our products are priced higher than the competition, they perform better and last more than twice as long, which is the point of switching to LEDs in the first place and drives our overall brand positioning.”

Cree reported its quarterly results after the markets closed Tuesday. Earlier in the day its shares closed at $27.41, down 8 cents. The shares hit their 52-week high of $32.92 last March.

David Ranii: 919-829-4877, @dranii

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