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No. of Recommendations: 46
You crazy bastard.

If it wasn't for you I might still be holding my all my CREE. It's obvious that me and my old buddy Jim weren't listening to the same call. But that's not surprising. Jim never hears the negative news regarding CREE. He shuts it out and goes into some catatonic state until he hears something marginally good. Then he snaps back to life and assesses a 60/1 PE ratio as fair. Glad to see you modified it from 100/1 in light of thse new facts, Jim.

Here is the objective not-so-good, the bad and the very, very ugly for those of you who may want to hear something besides gushing optimism regarding CREE.

Gross margin is down because ASP's declined faster than they could decrease costs.

One of their very large customers is looking for declining demand in Q1. Another expecting some growth.

The laser, the next big source of revenue for CREE is having problems and looks to me like it will be delayed further. They can not even acheive constistent lifetime of 1000 hours at a production level. They need consistent 10,000 hrs for a viable product.

They are seeing some interest in microwaves, but no matter how you slice it they contributed $300,000 in revenue last Q. Even if this business quadrupled over the next year, the revenue is insignificant.

Recvd a Shottky order (no rev specified) working with another customer.

Only comment on lawsuit was "At this point" the charges are without merit.

I tried to tell you this in another post Which was quickly dismissed by Jim) regarding Sumitomo. The Sumi contract must be fully ramped by now. CREE did 60M in 3Q (the first Q of the contract), 64M this Q and 64M next Q. Those of you who were expecting massive top-line growth from the new, improved Sumi contact will be dissapointed. While the last Sumi contract was not for 20M per Q, it is obvious they were purchasing close to that number towards the end of that contract anyway.

Cell phones increased.
Gaming was steady.
Auto declined in June Q.
Gemstone declined due to lower yeilds.

X-brite units doubled, but they have to work with people on packaging. Many just went to the already qualified mega-brite. It will take "1 or 2 quarters to solve". X-brite is 4-5% of revenue or only about 2M. While this is a nice product going forward, don't assume that if it units double again, it means revenue from it doubles also.

And finally, SGA will increase by over 2M this Q alone trying to convince a judge that Eric is a mental case.

You have to do some pretty fancy convincing to justify to yourself that there is a good reason to own CREE right now. Hoping for a judge to dismiss a lawsuit which generates a stock pop is a lousy investment thesis, IMO. It is obvious significant revenues will not be coming from any other source than LED's for many, many months, and now they seem to be struggling also?

Disregard my blatant, bullish, buddy Jim's constant recital of blue LED's 64.5% revenue growth (BTW Jim, I'm the guy who first posted it).
It doesn't break down which are low, mid and hi brite. And it doesn't necessarily equate to CREE growing 64.5% per year. And past performance is not necessarily indicitive of future results.

Those of you who thought that legal expenses should be viewed as non-recurring revenue were dead wrong. It may "recur" for the next several Q's. Those of you thought and that an announcement of an SEC inquiry was already priced in were dead wrong also. And if you think that an announcement of a formal inquiry is priced in, you are dead wrong again.

Close your eyes and try to imagine a company whose management consistently promises, then delays new products. Who has come under attack for questionable dealings in the past, and is currently defending against 9 or 10 law-suits. Imagine you have been surprised before by certain undisclosed items on CC's. Imagine it is trading at 8 times earnings and has guided to flat revenue.

Now imagine the company is not CREE.

Would you invest in it?

I will always be watching CREE for better times. These aren't they.
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