Cree Profit Tops View, But Revenue Misses; Shares Down 7%

(RTTNews) - Cree Inc. (CREE) Tuesday reported an increase in profit for the third quarter, driven mainly by a 16 percent increase in revenues and stronger operating margins with earnings beating Wall Street estimates by a penny, although revenues fell short of expectations.

The energy efficient lighting products maker also detailed an outlook for the fourth quarter, with the mid-point of earnings indicated to miss estimates while revenues are expected to trump expectations. Shares of Cree tanked 7 percent in after-hours trade, following the news.

Durham, North Carolina-based Cree's third-quarter profit rose to $28.2 million or $0.23 per share from $22.2 million or $0.19 per share last year.

Adjusted earnings for the quarter improved to $0.39 per share from $40.8 million or $0.34 per share last year. On average, 18 analysts polled by Thomson Reuters expected earnings of $0.38 per share for the quarter. Analysts' estimates typically exclude special items.

Cree's revenues for the third quarter grew 16 percent to $405.26 million from $348.93 million last year. Seventeen analysts had a consensus revenue estimate of $407.29 million for the quarter.

Gross margin for the quarter declined to 37.0 percent from 38.1 percent last year, while operating margin improved to 7.5 percent from 6.7 percent last year.

LED products revenue rose 3 percent to $201.1 million, while lighting products sales jumped 35 percent to $176.7 million and power and RF products revenues rose 21 percent to $27.4 million.

"Fiscal Q3 was a solid quarter as revenue and operating income were in line with our target range and the business is well positioned to grow in fiscal Q4," said Chief Executive Chuck Swoboda.

Looking forward to the fourth quarter, Cree expects earnings of $0.23 to $0.29 per share, adjusted earnings of $0.38 to $0.44 per share and revenues of $430 million to $460 million. Analysts currently expect earnings of $0.44 per share on revenues of $435.09 million for the quarter.

CREE closed Tuesday's trading at $58.05, up $0.49 or 0.85%, on the Nasdaq. The stock, however, dropped $3.92 or 6.75%, in after-hours trade.