Cree Likely To Witness Significant Lighting Revenue Decline In Q3’16
Leading LED products manufacturer, Cree is set to announce its Q3 2016 earnings on April 26th, 2016. (Fiscal years end with June.) Earlier this month, the company revised its guidance for the quarter, lowering estimates, due to lower than expected commercial orders for lighting products. Cree deemed the decline to be temporary and attributed it to service disruptions arising from an ERP system upgrade. However, investors reacted strongly to this news, inducing a more than 10 percent drop in the stock price.
The past year has been a tough journey for the LED industry, as margins have squeezed to a point where it has become increasingly difficult for a large number of companies to stay afloat. Even though we expect Cree not to see much revenue growth in 2016, due to pricing pressure and high competition, we believe that the company can leverage its vertically integrated model and its restructuring efforts for cost improvements to improve margins. Below we analyse key metrics for Cree as expected in its Q3’16 results.
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