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To: slacker711 who wrote (5354)	5/9/2001 9:50:07 PM
From: slacker711	Respond to of 10714

Decided to post the analyst highlights.... Stephens Inc. Research Bulletin May 9, 2001 CREE, INC. FYJun. CEPS* Prior Est. CREE – $24.49 Rating: MARKET OUTPERFORMER 00A $0.43 Price Target (12 mo.): $25 01E $0.66 N.C. Todd Cooper (501) 377-2503 02E $0.65 N.C. *Excludes Amortization of Goodwill Product Roadmap Discussed at Analyst Day •Yesterday, we attended Cree’s analyst day in Durham, North Carolina, which consisted primarily of a series of technical presentations by the division managers of the Company’s Optoelectronics, Power and RF divisions. CEO Chuck Swoboda kicked off the presentation by stating management’s goal of growing to $1 billion in revenues within the next five years. •In the Optoelectronics division, Cree unveiled its new MegaBright blue light emitting diode (LED), which at 10mW is twice as bright as its current ultrabright LED. The brightness level of the new silicon carbide (SiC) product equals that of Cree’s two primary competitors in this area—Nichia Corp. and Toyoda Gosei Co. Ltd., both of which offer competing sapphire-based LEDs. •The theoretical brightness limit for a SiC LED is 70mW, and about 50mW equals the brightness of a car headlight. So while the new product represents a significant step for Cree, the Company’s LEDs, and LEDs in general, still need to get a lot brighter to take full advantage of everyday illumination opportunities. •The automotive industry represents a huge potential market for Cree’s LEDs. The automotive industry accounts for 20% of overall LED sales. However, only about 10% of the approximately 15 million cars that are produced annually incorporate LEDs into their design. The automobiles that do use LEDs are typically higher-end, European-made cars. The BMW 7 Series uses about 500 LEDs. We think that the trend has been established: more and more automobile manufacturers will use LEDs for internal lighting, dashboard backlighting and indicator lighting. •On the power front, Cree expects to release its first Schottsky diode at the start of fiscal 2002, which begins in July. At least one semiconductor manufacturer, Microsemi Corp., has already announced its own Schottsky diode. The SiC wafers used to manufacture these diodes come from Cree. •Further out on the power production roadmap, Cree sees an opportunity for power-factor correction at the utility grid level as well as high-voltage dc transmission at the utility level. For all power applications, device cost will be the key to market penetration for the SiC devices. •Cree is very excited about its recent acquisition of UltraRF, which makes power amplifiers for wireless base stations. UltraRF is on the cutting edge of this technology, with chips that can operate at frequencies up to 2.5 GHz, the upper boundary of silicon. •The UltraRF division is seeing the first signs of component demand for the third-generation (3G) wireless infrastructure. However, we believe it won’t be until early next year that this demand begins in earnest. •Cree’s main competitors in the RF space are Motorola, Philips and Ericsson. From a technology standpoint, Cree believes that it is on par with the industry leader Motorola. We believe that the Company is in a nice position to gain market share when the wireless infrastructure market rebounds.