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I agree that analysts' estimates are typically on the low side for rapidly growing markets like Cree's. However, I guess I prefer to err on the conservative side when trying to read my crystal ball. I much prefer to be pleasantly surprised by a stock's performance than the other way around. (That said, I secretly think there's a good chance to hit $500 by year's end... :)

I was aware of the rather high price target, and did what I could to keep it from going higher. If you look at the math I did, my estimate, which is based on only 1/3 of capacity being utilized in 2001, and profit margins for the LED division remaining steady, and no profits to be attained from RF chip and blue laser sales, might be a bit conservative as well.

I am curious, though: how did you arrive at your estimated 80% LT annual growth figure

Maybe I should've went over this a little more. My estimates for the next two years guess that earnings will grow at an average of about 132% to $3.13/share in 2001. 80% 5-year earnings growth from the company's current $.58 base would result in EPS of $10.95 in five years. After these two years, I guessed that on the low end, Cree would grow its earnings by 70% for the next three years due to continuing LED sales growth, expected to be over 85% of Cree's profits by 2001, as well as blue laser and base station chip sales. However, that by itself would lead to EPS of $15.38 five years from now. So even that 80% estimate might be on the low-end.

Hope this answers your questions,
Eric
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