My notes on the CC
Message 14129669
Rev 16.0M to 17.7M to 20.0M to 23.9M to 28.4M to 33.3M JUN00
EPS 0.26 to 0.15 to 0.18 to 0.26 to 0.30 Jun00 per briefing.com
EPS 0.12 to 0.14 to 0.15 to 0.18 to 0.26 to xxx per daily charts
52-Week Low on 5-Aug-1999 $23.50
Recent Price $112.50
52-Week High on 6-Mar-2000 $202.00
Market Capitalization $3.73B
Shares Outstanding 33.1M
Float 25.2M
Price/Book (mrq*) 8.76
Price/Earnings (ttm) 153.06
Price/Sales (ttm) 39.74
Short Interest As of 8-June-2000
Shares Short 1.29M
Percent of Float 5.1%
Shares Short (Prior Month) 1.20M
The acquisition of Nitres, Inc. (now Cree Lighting Company), completed on May 1, 2000, was treated as a
pooling of interests transaction. Therefore, the historical operating results of Cree Lighting Company are included
for the quarters and years ended June 25, 2000 and June 27, 1999 and all prior periods. Included in the quarter,
the company reported a one-time charge associated with the acquisition, which was offset by a gain on the sale of
security investments.
In other news, Cree Lighting Company reported that it has demonstrated a near-UV/violet InGaN light emitting
diode (LED) with 28% quantum efficiency. This is the highest known external quantum efficiency publicly reported
for an LED in the UV-to-blue portion of the wavelength spectrum. The LED emits at 400 nm and has a power
output of 17 mW.
LEDs in the UV and near UV spectrum are particularly important for making white solid state light bulbs using
phosphors to down convert the wavelength of the light emitter to the visible spectrum, then color mix to make a
white bulb. High quantum efficiency is critical to making energy efficient solid state light bulbs. The Cree Lighting
emitter demonstrated has overall (wall plug) efficiency of 22%.
Hunter added, "These are impressive results and demonstrate the substantial progress Cree Lighting has made to
further improve the efficiency of LEDs. This technology has the potential to revolutionize the lighting industry by
enabling solid state light bulbs with high efficiency in the years ahead."
cree.com
CC notes
- Assigned to Russell 1000 list from Russell 2000 list
- led sales continue to ramp.
- Small chip products 5% of LED rev
- 40% aiutomotive, 25% Handsets
- LED 124% rev increse y2y
- Seeing shift in to high brightness products
- Gemstones only increase 4%, sales to chalton? decline and now only 10% of total rev
- Govt contract revs declines 5%
- Margins above 505 vs. 40%+ y2y
- Sales 25% increase in sales prices LED due to high brightness products, production costs declined 47%
- Challenge next FY in to increase capacity for high brightness products and increasing yields
- 12% decline in R&D due to funding of MVIS, cost is higher than year - looking for highbrightness breakthoughs
- Cash/investment 304M in June despite 34M in spending in the quatrter in capital spending
- 250K expansion in facilty in 12-18months
- cash flow 63M vs. 20M in 1999 (not sure if y2y)
- account receiveablea decrease due to strong collection
- inventory turns only 33 days vs. industy ave of 55 days
- FY2001 target 60% y2y with margins low 50% range. EPS is 55-60%. Must reduce costs and increase
brightness.
- 76.6M in backlog, highest ever.
- 34% net profit margin for q, 28% for the Y
- blue laser product launch june 2002. Demonstrated abilty to read optical storage products.
- Gemstone trying to improve quality of 3 inch products. Only 5% gemstone sales projected next year.
- Nitres now known as CREE lighting. Assembled premier lighting team in the world. Best efficienties in optial
voltage in the world?
- expect new sales contract announcements this quarter in the automotive lighting, display lights and cellular
backlighting
Q&A
- cost per chip came down 47%, try to achieve 50% cost reduction next year.
- 3 inch process display going slower than we like. Concentrating on 2 inch.
- A case on intellectual property going on against Achia of Japan?
- competitors coming out of woodwork but missing quality or abilty to produce capacity. Uniformity in brightness is
critical for quality. Even through yields low, margins improving.
- Nitres contribution revenue to this Q bottom line was only contract revenue.
- Cree lighting latest UV led product ships within 6 months from Nitrous side.
- put in new epitaxy? platform for 3 inch wafers. Looking at systems that can operate at 2 inch and three inchs.
- rf micro - 6 customers currently involved in samples/qualifications - cellular and broadcast side both - they expect
1 of those customers to step out quick after a "fast qual"
- demand for hibrightness LED - booking out second half of the year. Will fill out fiscal year in next quarter.
Quarter sequencial growth will be double digits
- Only penetrated 1% or less of cellular lighting - targeting high end platforms, see good growth in that area
- Aurras? largest customer, Sumitomo over 10% of revs, 3CWa? now less than 10%
- we don't want to compete against someone who wants a LED chip to lightup a few times. Customer figures out
quality issue vs. price
- Cap exp spending was 31M in this quarter
- Revs split 40/40/20 Europe/Asia/US
- Making progress on continuous wave lasering. Starting to formalized product blends.
- Hard for us to track where blue LED chips go - sell generics for a customer and not sure if goes to handsets or
other places
- LED power for large displays is in its infancy
- Seeing general lighting application for UV starting to come on
- Seeing small chipset revs climb
- RF Micro - released 10W product, going up to 30W and 60W. Our 30 Watt part competes with the LGMoss?
60W product
Tough to listen on the phone for 44 minutes.
Cree looks good for next year and has technological staff to continue momentum. When the knife stops on the
Nasdaq drop, buy some CREE if not in the portfolio.
Jack |
