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To: FLSTF97 who wrote (12502)	12/9/1999 6:53:00 PM
From: unclewest	Read Replies (1) \| Respond to of 54805

I still think that CREE would have been smarter to raise prices enough to no longer be capacity constrained (it would make the new fabs easier to pay for.) The only caveat to that is if the move were strategic: a new player about to put product on the market and you need to squash his cash flow (a la Intel/AMD). Fundamental point is: do they have the rare set of management that can be effective in the tornado and on main street? this is from memory...figures may be off a bit... cree has some 55 million cash and 2 1/2 million in monthly net cash flow. the new plant that will triple production will be paid for from cash on hand and cash flow..no borrowing anticipated for the expansion. i don't know how to evaluate your fundamental point question about management...can you help there? seems they are doing a heckuva good job so far. the price reductions are most certainly aimed to make life difficult for sapphire based leds.

To: FLSTF97 who wrote (12502)	12/9/1999 7:17:00 PM
From: Sunny	Read Replies (2) \| Respond to of 54805

Fatboy, I think dropping price will open up applications that are currently met with other even lower price points. We could think of this as knocking down pins. Cell phone lighting, dash board lighting, signage and on. With the increase in yields estimated at 300% we should see improved margins and larger markets. I think that bodes very well for the future. Cree may sacrifice some cash flow in the near term but establishing a much larger market presence in more markets insures the future. Sunny