What To Expect From Cree’s Q2 Earnings

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Leading LED manufacturer Cree (NASDAQ: CREE) is set to announce its fiscal Q2 results on January 23. The company has seen its top line and profitability decline substantially in the last few years, owing to fierce competition in the LED industry, which has suppressed LED prices as well as Cree’s market share. However, it is worth noting that Cree’s performance, in terms of both revenues and margins, did dramatically improve in recent quarters on a sequential basis. This comes as a source of respite for management, which is expecting a turnaround in its business in the upcoming quarters. The company expects revenues between $340-360 million in Q2, with the midpoint indicating a 1% year-over-year increase. Lighting revenues are likely to be to be lower than the previous quarter by 8%, primarily due to the weak North American market and possible short-term impacts from the recent hurricanes. Meanwhile, the Wolfspeed business is expected to grow sequentially as the company continues to improve its productivity.

Factors That Could Help Drive Growth In The Future

Building Capacity In Wolfspeed Business: Revenue and gross margins from this segment grew at a strong pace sequentially each quarter. This is attributable to higher factory utilization and improved production. The company is seeing significant demand in silicon carbide and is currently working on improving capacity.

– Expanding LED Product Portfolio: Supported by a favorable product mix, the company’s revenue and gross margin improved every quarter. Cree is expanding its LED product offering with new high-power and mid-power products that leverage its market leadership. The company has entered into a joint venture with San’an, which can help Cree increase its presence in the mid-power LED component market.

– Growing Lighting Revenue, Increasing Margins: The company is looking to boost revenues and margins by investing in channel relationships, improving execution, and continuing to deliver innovative lighting solutions.

See Our Complete Analysis for Cree Here

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