LED Segment Slides As Demand Concerns Resurface
09/08 04:12 PM
NEW YORK (Dow Jones)--Shares of several companies that make light-emitting diodes and related equipment slumped Wednesday as fears resurfaced about weakening demand for equipment such as liquid crystal display screens that use the LED bulbs.
Shares of LED-maker Cree Inc. (CREE) closed down 8.1% to $50.18, Veeco Instruments Inc. (VECO:$33.44,00$-3.03,00-8.31%) fell 8.3% to $33.44 and Aixtron AG (AIXXF:$26.1150,$0.0000,0.00%) was 5.3% lower at $24.78. The latter two companies manufacture equipment for building the bulbs. In recent late trading, Cree and Veeco shares are unchanged while Aixtron (AIXXF:$26.1150,$0.0000,0.00%) is down to $24.72.
Analysts blamed a combination of poor demand for LEDs and the products that use them, oversupply of the bulbs and a slowdown in the influential Asian LED market for the tumble.
"Movements in Asia tend to act as a good proxy for the rest of the industry," said Raymond James analyst Hans Mosesmann. He pointed to technology giant Samsung Electronics Co.'s (SSNLF:$655.8000,$0.0000,0.00%) (SSNHY, 005930.SE) increasing tendency to use its own LEDs in its products as a sign of problems to come for LED suppliers.
Avian Securities LLC's downgrade of Veeco and Aixtron (AIXXF:$26.1150,$0.0000,0.00%) from positive to neutral was also blamed for the slide.
Concerns over demand for LEDs have surfaced before, with shares of Veeco, Aixtron (AIXXF:$26.1150,$0.0000,0.00%) and Cree suffering from a similar bout of weakness last month, following a report by a Taiwanese newspaper that said makers of flat screens were cutting orders to LED makers.
Mosesmann also cast doubt on Cree's ability to bounce back from its recent weak performance. Although he expects the company to meet its guidance for the September quarter earnings, he doubts its ability to meet sales growth estimates for the December and March quarters.
"Expectations are still too high," he said. "With the prospects of potential downward revisions, the shares appear vulnerable to us."
-By Francesca Freeman, Dow Jones Newswires; 212-416-2970; francesca.freeman@ dowjones.com
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09-08-101612ET |
