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To: jameswallen who wrote (6610)	1/18/2003 5:29:05 PM
From: Ron	Read Replies (1) \| Respond to of 10714

earnings article from local paper that covers CREE: DURHAM -- Cree reported a record-setting fiscal second quarter as revenue surged 38 percent amid strong demand for its semiconductor chips used to light mobile-phone handsets and cars. The company had sales of $56.7 million, the most ever in a single period, up from $41 million during the same quarter a year ago. Profit beat analysts' estimates, climbing to 12 cents per share from a loss of 24 cents per share at the same time last year. Analysts had forecast profit of 8 cents per share, according to a Thomson Financial survey. "It was a really strong quarter," said Ramkrishna P. Kasargod, an analyst who follows the company for Morgan Keegan & Co. in Memphis. "Clearly, they're taking advantage of the opportunities that are out there." Durham-based Cree is benefiting from a rise in sales of mobile phones with color screens and blue backlit keypads. Nearly half of the revenue it received for its primary product, light-emitting diodes, was linked to the mobile-phone industry. "While cell phones is definitely the biggest, it is really expanding to a much broader base," Cree Chief Executive Chuck Swoboda said. "That shows that there are a lot of markets that, frankly, we haven't factored in that much." Cree is seeing increasing demand for its LEDs from the automobile industry, which uses them to light dashboards and other interior components. Its chips also are used in traffic lights, video games and other devices. "We far exceeded expectations," Swoboda said. "I think that is a sign our business is ahead of plan at this point." While sales improved, Cree also got a boost by settling a patent dispute with Japanese rival Nichia that cut legal costs. And it ended a troubled contract with customer Spectrian, resulting in $5 million in extra cash. Cree expects third-quarter profit of 13 cents to 14 cents on revenue of $59 million to $60 million, Swoboda said. He declined to provide projections for the fourth quarter but said he is optimistic growth will continue. One of the biggest challenges Cree faces is increasing manufacturing capacity and productivity to keep up with demand. It added 100 employees in the quarter, ending the year with 1,000 workers. It will continue to hire, though Swoboda couldn't say how many employees it will add.