Cree Shares Up 6% As Q2 Results Top Estimates, Guides Q3 In Line

(RTTNews) - Shares of Cree, Inc. (CREE) surged six percent in extended trading on Tuesday after the semiconductor company reported results for the second quarter that topped analysts' expectations.

However, the company reported a profit for the quarter that plunged 66 percent from last year, reflecting lower margins and a revenue decline. The company also provided earnings and revenue guidance for the third quarter, in line with Street view.

"We made solid progress in Q2 with operating margin higher than targeted due to an improvement in gross margins in our lighting business. The market for LED lighting is still in the early stages, our new product pipeline is strong, sales momentum is building and our brand is growing in the market," Chairman and CEO Chuck Swoboda said in a statement.

Durham, North Carolina-based manufacturer of LED diodes, LED lighting, and semiconductor solutions for wireless and power applications reported net income of $12.15 million or $0.10 per share for the second quarter, lower than $35.68 million or $0.29 per share in the prior-year quarter.

Excluding items, adjusted earnings for the quarter was $37.95 million or $0.33 per share, compared to $56.77 million or $0.46 per share in the year-ago quarter.

On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.22 per share for the quarter. Analysts' estimates typically exclude special items.

The company noted that, excluding the R&D tax credit benefit, reported and adjusted earnings per share for the second quarter of fiscal 2015 would have been $0.08 and $0.25, respectively.

Net revenues for the quarter edged down 0.5 percent to $413.16 million from $415.09 million in the same quarter last year, and topped sixteen Wall Street analysts' consensus estimate of $412.12 million by a whisker.

LED products revenues decreased 29 percent to $151.88 million, while lighting products revenues rose 33 percent to $230.17 million from the year-ago quarter. Power and RF products revenue grew 18 percent to $31.11 million from last year.

operating margin for the quarter contracted 600 basis points to 2.5 percent from last year's 8.5 percent, as gross margin declined 440 basis points to 33.1 percent from last year.

"As evidenced by our significant share repurchases in Q2, we believe we are on the right track to continue to grow the company and increase profits over the next several years," Swoboda added.

Looking ahead to the third quarter, Cree expects adjusted earnings in a range of $0.21 to $0.25 per share, on anticipated revenues between $395 million and $415 million. Street is currently looking for earnings of $0.21 per share on revenues of $404.42 million for the third quarter.

CREE closed Tuesday's regular trading session at $32.34, up $1.44 or 4.66% on a volume of 6.25 million shares. The stock surged a further $1.94 or 6.00% in after-hours trading.