CREE reported Sep-Q results of revenue and EPS of $408MM and $0.22 versus Street at $407MM and $0.12. The company is guiding revenue and EPS midpoints of $408MM and $0.17, versus Street of $420MM and $0.13. OCF missed but FCF was basically in-line.
We’d consider these results mixed at best.
The good news is that the company announced another long-term SiC supply agreement with a large ‘leader’ in the power semiconductor market, meant to imply either TI, Linear, or Maxim.
Between the lines…
- Lighting GM% continues to improve
- WS revenue growth accelerated to 93% Y/Y
Our guess is that after Street adjusts down their Dec-Q revenue, there could still be another revenue estimate lowering on the out-quarter, as Street estimates have become somewhat complacent on Lighting revenue, which is still squarely in contraction.
CREE is on our Best Ideas LONG due to the transition to wide bandgap semiconductor based power electronics, the addition of G-LOWE to CREE, the improving Lighting GM% thanks to warranty reversal, and the potential for LED to shrink gracefully as source wafers are re-purposed to higher value/higher margin WS output. But we fully accept that with cyclicals, there are times where Street estimates need to adjust due to rate of change. We will come back with more after the call and we will see how much revenue assumptions will need to adjust after this quarter.
Please call or e-mail with any questions.
Ami Joseph
Managing Director
Yosef Vaitsblit
Analyst
