Big block buy on cree and Herb Greenberg
3/8/2001 9:54:00 AM $19.000 200,000shares or $3,800,000
Perhaps short covering.
From Herb today
With Cree (CREE:Nasdaq - news - boards), that is. After this column took more abuse from investors (via email and on the message boards), reality hit Wednesday -- a preannouncement for the fourth fiscal quarter. And that's before taking into account the negative impact from the cozy cuddling between parties either formally or informally related to Cree. (The most famous is with Charles & Colvard (CTHR:Nasdaq - news - boards), the fake-diamond maker, which has been stuffed with more than four years' worth of Cree inventory. But I digress...) Cree, like all others, is blaming the slowing economy on its shortfall, and says it believes "that as long as general economic conditions improve and its pipeline of LED product improvements are rapidly deployed in new designs, sequential growth could resume in the second quarter ... and beyond ... assuming the first-quarter sequential growth remains flat to the fourth quarter of fiscal year 2001." That's a lot of ifs, ands or buts (and coulds!)
What's really going on? What's really going on is that prices of LED chips and related components are in free fall. (My assistant, Brian Harris, talked to a company that is selling wafers bought from Cree and others at 25% off list price. Last year, wafers, which are rapidly becoming a commodity, represented 13% of Cree's sales. Wafers that cost $1,000 a few years ago now can be found for $400.) Perhaps more importantly is that 40% of Cree's LED revs come from the auto industry and cell phones -- not exactly two areas of growth in the current environment. And certainly not good news for Cree. And this note: The Hostile React-o-Meter no longer spins out of control when Cree appears here.
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Jack |
