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GT Advanced Technologies, Inc. Message Board

  • johnnie_beans johnnie_beans Oct 23, 2013 3:02 PM Flag

    Spillover? Cree plummets

    All is not yet peaches and cream in LED lighting land?

    Cree plummets after guidance misses estimates

    Shares of semiconductor materials and devices manufacturer Cree (CREE) are sinking after the company provided second quarter earnings guidance that fell well below analysts’ consensus estimates. WHAT'S NEW: Last night, Cree reported Q1 EPS of 39c and revenue of $391M, compared to analysts’ consensus estimates of 39c and $392.31M. WHAT’S NOTABLE: Cree's Q2 EPS guidance fell well shy of consensus estimates. The company predicted that its Q2 EPS would be 36c-41c on revenue of $400M-$420M, compared to analysts’ consensus estimates of 44c and $414.3M, respectively. ANALYST REACTION: This morning, research firm Needham downgraded Cree to Hold from Buy due to the company’s disappointing Q1 report and guidance. Another firm, Stephens, downgraded the stock to Underweight from Equal Weight. PRICE ACTION: In late morning trading, Cree fell $13.01, or 17.5%, to $61.27 on nearly four times its average daily trading volume. OTHERS TO WATCH: Two of Cree's competitors, RF Micro Devices (RFMD) and STMicroelectronics (STM), were down significantly following Cree’s report.

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    • Cree has always been like that.....a company with great products and a bulletproof balance sheet, but seemingly unable to convert its leadership position in LEDs into strong net profits. I still don't understand the problem, but I did learn to stay away from any long-term investment.

    • It does look like CREE spillover.
      Looking at the chart, when CREE got hit hard, so did GTAT.

      "We believe that the uptrend in general lighting continues to accelerate, a positive for Cree given its strong position in North America," wrote Daniel Amir, an analyst at Lazard Capital Markets, in a research note. "We continue to believe that Cree is poised to benefit from the LED lighting adoption with its vertical strategy and that one should take a multiple-quarter view of its consumer light bulb approach."

      I expect GTAT to fully recovery going into the weekend.
      This is bullish stuff for the industry, and I think the spillover is taken out of context with GTAT.

      Sentiment: Strong Buy

    • I'm glad someone brought this up.
      I think if you read it more carefully, you'll see that CREE falling is a result of compressed margins due to pricing pressures from competition. The LED industry is strong with a lot of competition so in order to gain market share, one must lower prices especially when competing against GE, Phillips, and Walmart.

      Further Margin pressure will result due to the rise in the price of sapphire. I would imagine significantly considering what's expected for sapphire pricing going into 2014. Expect this to cause a surge in demand for sapphire furnaces immediately.


      Sentiment: Strong Buy

0.43730.0000(0.00%)Oct 15 4:00 PMEDT

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