Cree Saw Double Digit Revenue Declines In Q3’16, Driven Largely By Customer Service Disruptions
Leading LED manufacturer, Cree, posted its Q3 2016 earnings on April 26th. (Fiscal years end with June.) As noted in an earnings pre-announcement earlier this month, the company saw an approximately 10% decline in its revenue, due to a significant decrease in commercial lighting products. At fault were customer service disruptions resulting from an ERP system upgrade in the quarter. However, according to Cree, the ERP upgrade is now completed and it is seeing orders picking up in Q4.
The past year has been a tough one for the LED industry, as margins have squeezed by excess industry capacity 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 improve factory utilization to improve margins. Below we analyse the key metrics as reported by Cree in Q3’16:
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