Cree Likely Witnessed Strong Growth In Lighting Revenues In Q4’16
A delay in new product launches and slower than expected demand for lighting products, coupled with a guidance miss, had significantly affected Cree’s stock in fiscal Q3’16. (Fiscal years end with June) The company’s revenues in the quarter were affected by 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 sending Cree’s stock fell by approximately 40% in between the months of March and May.
The company’s profitability in the LED business has been suffering from an excess supply and the resulting dramatic price reductions. 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. Nevertheless, the company’s preliminary results for Q4 show strong growth in its lighting products revenue. Though Cree will report its Q4’16 results on August 16th, we can infer from its preliminary results for the quarter that it is past the service disruption challenges it faced in Q3’16.
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