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Technology Stocks : Wolf speed

WOLF 18.00

-3.3%

10:46 AM EST

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To: EvanG who wrote (10303)	1/28/2021 7:59:31 AM
From: slacker711	Read Replies (2) of 10712

Wolfspeed's GM's did improve though they are far below what they were when they were last generating this kind of revenue. They previously estimated that the impact of COVID was roughly 5% of GM and that still only takes us to 43.5%. Not sure if I have this right, but I think the difference between Wolfspeed's non-GAAP gross margins and the 33% GAAP gross margins for the company is $3.5m stock based compensation expense plus some "unallocated costs" which I think they have described as corporate costs. I don't see how that makes any sense in the gross margin line but I need to relisten to the October call where I think they talked a bit about these costs. All of the above being said, the GM's are still way down from previous marks when they were generating ~$128m in revenue. I know that they attributed some of the decline in 2019 to customer mix when Huawei went away but I also wonder whether they ever truly solved the yield issues that hit at around the same time. seekingalpha.com Wolfspeed gross margin was 38.5% compared to 36.6% last quarter. The sequential increase was driven by yield and cost improvements in our device product lines. Gross margin performance also continues to be dampened by our continued COVID-19 safety measures. Cree’s Q2 non-GAAP gross margin for continuing operations was 35.4% compared to 34.5% last quarter and includes the impact of $4 million of corporate items.

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