In preliminary estimates for its fiscal third-quarter 2016 (to 27 March), Cree Inc of Durham, NC, USA expects revenue of $367m, about 11.5% below the targeted $400-430m, and down from $435.8m the prior quarter and $409.5m a year ago.
Specifically, Lighting Product revenue is expected to be about $187m, lower than targeted (and down on $255m last quarter and $224m a year ago). This is due primarily to lower commercial lighting orders, driven by three main factors: customer service disruptions related to converting to a new enterprise resource planning (ERP) system; delays in new product introductions (which prompted some customers to delay their projects or switch to other products); and a slower-than-forecast calendar first-quarter 2016.
LED Product revenue is estimated to be in-line with the expected $151m, down only slightly on $153m last quarter (fiscal Q2/2016) and $154.4m a year ago.
Power & RF Product revenue is also estimated to be in-line with the expected $29m, down on $31m a year ago but up from $28m last quarter.
On a non-GAAP basis, gross margin is expected to be 30.5%, below the expected 31.7%, and below both 31.7% last quarter and 31.4% a year ago.
Operating expenses are estimated to be $5m lower than the targeted $100m, and cut from $103m last quarter and $102m a year ago.
Earnings per diluted share are expected to be $0.13-0.15 (below the targeted $0.22-0.29), more than halving from $0.30 last quarter and down on $0.22 a year ago.
During fiscal third-quarter 2016, Cree repurchased 0.6 million shares of its common stock under the firm's stock repurchase program at an average price of $28.15 per share (comprising a total value of $17.8m). After this repurchase, there is $350m remaining in the stock repurchase program through 26 June.
"We've addressed the root causes that led to our recent business challenges," believes chairman & CEO Chuck Swoboda. "While it's premature to provide specific targets at this time, the order rate in commercial lighting improved in March, and we're optimistic that this, combined with demand for new products, will begin to drive growth in fiscal Q4," he adds.
