22 Jan 2014
Revenue and profits up sharply as sales of replacement LED bulbs surge.
LED chip, bulb and fixture manufacturer Cree has reported a sharp increase in revenue for its latest financial quarter, as sales of its replacement bulbs surged on the back of a major marketing campaign in the US.
At $415 million for the three months that ended December 29, 2013, revenues were up 20 per cent on the same period last year and set another new record for the North Carolina firm.
And despite increased costs associated with that marketing campaign, profits were also up sharply, with an operating income for the latest quarter of $35.4 million in the latest quarter comparing with $25.1 million a year ago.
"Fiscal Q2 was another strong quarter, driven by strong growth in LED fixtures and LED bulbs,” said the company’s long-time CEO, Chuck Swoboda. “For the first half of fiscal 2014, revenue is up 22% from the first half of fiscal 2013 and non-GAAP operating profit is up 38%."
"Our strategy is working, the business is growing and we've made great initial progress building the Cree brand."
The latest quarter saw Cree introduce LED-based replacements for 75 Watt incandescents in both warm-white and cool-white format, with Swoboda telling an investor conference call that the company’s LED bulb sales to consumers doubled sequentially – driven by what he called the “Fall lighting season”, as well as US energy utility rebates for the purchases and the marketing push.
He added: “We better understand consumer buying habits for LED bulbs with every passing week and it is clear that the two primary drivers are product quality and price, with brand also becoming a more relevant buying criteria. Product quality is a combination of the look, feel and performance of the LED bulb.”
“Price is the other important factor, which is affected by our price to the retailer, their price to the consumer and utility rebates.”
For the forthcoming quarter, which will be impacted somewhat by the seasonal slowdown generated by the Chinese New Year holidays, Cree is expecting to post sales of between $390 million and $420 million and see a slight fall in profits.
But with the LED industry apparently at the start of a cycle of booming demand as traditional lighting is replaced with efficient solid-state alternatives, Cree's stock price remains close to long-term highs.
Ahead of the latest quarterly results, the firm's $62.83 closing stock price on January 21 was equivalent to a market capitalization of some $7.5 billion.