LED lighting company Cree reported a 10 percent decline in quarterly revenue and a 31 percent decline in adjusted net income – troubling results that nonetheless were in line with the diminished expectations set by the company.
Earlier this month, Durham-based Cree cautioned that revenue and earnings for the fiscal third quarter that ended March 27 would fall well short of the targets that it had previously set. That news triggered a 15 percent drop in the company’s stock.
Cree said at the time that its sales shortfall was the result of customer service disruptions arising from conversion to a new software system, delayed product introductions and weaker-than-anticipated demand.
“I believe we’ve addressed the root causes of our recent lighting business challenges,” CEO Chuck Swoboda told analysts during a conference call Tuesday. “But recognize that it will take time to rebuild sales momentum.”
“We improved customer responsiveness in March, and new product momentum is off to a good start in fiscal Q4 with the release of several new commercial lighting products and two new LED products,” he added.
Mike McDevitt, the company’s chief financial officer, noted that “while we believe the lighting (software) issues are mostly behind us, we believe near-term commercial orders will take time to fully recover as we are regaining our customers’ confidence.”
Cree, which employs more than 2,500 workers in Durham, sells LED light bulbs and indoor and outdoor LED light fixtures as well as making components other companies use in LED lights. Its LEDs also are used to illuminate mobile phones, TVs, electronic signs and car dashboards.
Cree’s revenue totaled $366.9 million in the quarter, down from $409.5 million a year ago.
Revenue of lighting products, which accounted for 51 percent of revenue, fell 16 percent. LED sales fell 3 percent and its power and radio frequency business, Wolfspeed, fell 6 percent. Cree plans to spin off that business into a publicly traded company but will continue to own a majority stake.
Wolfspeed's power components are used in computer servers, uninterruptible power supplies and for solar energy, among other applications. Its radio frequency transistors and integrated circuits are used in radar and telecommunications systems.
Adjusted net income totaled $16.9 million, down from $24.7 million. Adjusted net income per share fell 23 percent to 17 cents per share.
The company projected that revenue in its fiscal fourth quarter would range from $370 million to $395 million.
The company reported its quarterly results after the markets closed Tuesday. Earlier in the day, its shares closed at $24.59, up 40 cents. Its shares have fallen 8 percent this year.