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Cree Soars As Q4 Earnings Not As Bad As Expected

LED lighting market leader Cree announced Q4 revenues of $243m, down 8% on the year. Earnings per share on a non-Gaap basis came in at 28 cents – down 49% from 55 cents a year earlier. Not great. However, both numbers were slightly better than market expectations of $234m and 27 cents.

Meanwhile, the company guided down for the current quarter, providing a revenue range of $245 – $255m against expectations of $253m and a range for non-Gaap EPS of 25 to 28 cents against expectations of 31 cents.

You can read the full earnings release here.

Cree rallied in the aftermarket following the earnings release, participants clearly taking the view that with the stock down 55% year to date the bad news is largely priced in. From here, near-term trading will no doubt be largely determined by the direction of the overall market.

However, evidence of progress in the reversal of one particularly negative issue would be critical in setting Cree up as a major play again – the slump in the Chinese street-lighting market. Cree is a major player in this market and the company’s revenues were significantly affected by the temporary regulatory slowdown imposed on domestic Chinese customers and the resultant inventory build. Any evidence that these domestic players are making good progress in working through their inventory build would be very encouraging.

Disclosure: I have no positions in Cree