Cree Cuts Q1 Outlook On Lower Sales Of LED Products

(RTTNews) - LED and lighting products maker Cree, Inc. (CREE) on Thursday forecast financial results for the first quarter to be lower than its prior forecast, citing lower sales of LED products due to weaker than expected global demand. The company's shares are down almost 15 percent in the regular trading session.

Durham, North Carolina-based Cree said it now expects first-quarter earnings to be below its previously announced target range of $0.25 to $0.30 per share on a reported basis.

On average, eighteen analysts polled by Thomson Reuters currently expect the company to report earnings of $0.39 per share for the quarter. Analysts' estimates typically exclude special items.

The company now expects revenue for the first quarter of about $428 million, down from its prior range of $440 million to $465 million. Analysts expect revenue of $455.31 million for the quarter.

The revised revenue forecast reflects lower LED Products revenue, due to weaker global demand than originally targeted.

Cree projects LED products revenue for the quarter to decline 20 percent year over year and 13 percent sequentially to $174 million. Revenue is expected to be lower sequentially for both direct and distribution customers.

However, the company expects Lighting Products revenue to grow 51 percent year over year and 7 percent sequentially to $223 million in the quarter, which is at the higher end for this segment of the company's previously announced targets. This reflects growth in both LED fixtures and LED bulbs.

Further, the company forecasts Power and RF Products revenue for the quarter to grow 24 percent year over year and 8 percent sequentially to $31 million, which is also at the higher end for this segment of the company's previously announced targets.

Cree said it expects overall gross margin to be below its previously announced targets, primarily due to the lower LED Products revenue and higher than targeted LED bulb revenue.

Looking ahead to the second quarter, Cree said its order visibility remains limited and is similar to this point in the first quarter.

Cree said it plans to release its final financial results for the first quarter and also provide a second quarter outlook, as previously scheduled on October 21, 2014.

CREE is trading at $33.91, down $5.71 or 14.41 percent on a volume of 5.62 million shares.