These notes are mostly unedited, I think that's the safest way to avoid copyright and posting violations. They're fairly coherent (I am a pretty good typist if I do say so myself)I did totally miss the question on intellectual property and patent infringement. If someone could supply those comments, I'd be most appresh...CREE CONF CALL 10/12/2000Q12000FRAN (ADMIN)introductionAdmin notes regarding how to get press release.Statement of agendaDisclaimerRequesting only analysts and instituional holders speak during the sessionAvailable via webcastCINDY (FINANCIALS): Highest product and operating margins in history11% sequential, triple results for yearMargins solid at 55% of revenueHB continues to experience the heaviest demandSmall chip product now comprises 15% of total volumeSales price declined 55% due to contractual discountsHandsets as percent of chips sold is steadyOnly 5% of revenue in europe (no euro worries)60% increase in Osram contractSiemens-osram largest customer in 2001SiC sales decreased 2% due to C&CC&C less than 10% of revenueDecline in moissanite expected to be offset by HBLED5% increase in gov't contractsProduct margins 58%, highest ever ***Lower HBLED offset by other products and efficienciesChallenges:Increasing capacity for HB and UB while decreasing costsSales prices will design 25% during FY2000R&D up 7% for microwave and optoelectronics including HBLEDCash 282 milInv up 13%, 57 day well below industry averageRoadmap for capacity increase over 2 years125,000 sq ft complete in Q2, equipped in Q4Accts Rec up, but well below industry avg at 48 daysROI increased to 16%, well above industry average2x HBLED released in Q2NEAL (OPERATIONS)2001 fiscal Q1 “finest performance in the history of the company.”Signed “largest ever supply contract”“backlog to unprecedented levels”“CREE is now the dominant supplier of nitride LED devices.” Customer signed an order on the spot which is unusual. Claim to have closed the brightness gap between sapphire and SiCCREE is lowering the price of existing products because of brighter productsBlue laser is gaining momentum. Achieved power outputs capable of reading and writing to optical media. On track to release laser duing f2002. Need to reduce defects, increase lifetime, greater efficienciesRadio Frequency: Customers indicate that CREE products will help them shorten design cycle from 2 yrs to 3 mosCustomers have verified that products perform, and there is a compelling benefit for next generation infrastructure30W RF on the horizonWAFERS: Quality improving in 2 and 3” diameters. Have not included C&C in fiscal projectionsFacility construction on schedule.Acquisitions: looking for targets where outside expertise adds value. Staff additions: Dr. shuji nakamura, working on a part-time basis exclusively for CREE lighting(is it just me, or did he totally deadpan this announcement….)First questioner:Questions: how many customers compriseover 10% of revenue? A 2Q: Last yesr, CREE shipping to 7 of 10 largest LED's. any change? same, but on verge of expandingQ: rf delivering in q3? A: 30W prototypes, 10W going in Q2Q: 10W as revenue or trial? RevenueQ: How many customers for 10W? A 25 to 30q: 10W used in driver amps? Yq: looking to 100-150W next calendar year? A: 60, then 100, 120… “probably could” do 150 next calendar year, but focusing on increasing yield in lower areas. q: is there demand in 10-30W? A: YQ: ZMOD? A : zmod is the “next generation power amp manufacturer.” “changes the methodoology” “using modules insteaed of discrete components.”Q: evaluating other partnerships in that area? YBlue laser:Q: Milstones for blue laser? On track. Haven't slowed. Q: Is there visible demand for blue laser? Not yet, but ASP's see the potentialQ: Biggest challenge? Lowering power requirements, decreasing defectsJohn mile of soundviewQ: Surprising announcement of UHB (ultra high brite) LED's. Changes my model a little. As you introduce UHB into production, what's the price difference, and would it modify the blended ASP revenues? A: in conservative view, standard products will decline quicker. Blended avg price would stay the same as your models. Does not expect gross margins to change drastically. Q: Still able to hit milestones for gross margin? YQ: Same rampdown in ASP's? YQ: RF – when does 10W go into full production? 2nd half cal 2001JD Abuchar, pacific edge investment managementQ: New potential competitors. Have you seen them out there in bidding product? A: It's mostly press releases. We sampled products, they are about 2 years behind. Not seeing them in volume in the marketplace. Competitors can't supply the volumeQ: Sell any MVIS stock this quarter? A: NO. Q: Any change with customers on allocation? Some products, yes. They are accepting new customers. UHB will be on allocation for quite some time.Ram Kasergad of Morgan and KeeganQ: Can you talk about supply/demand balance in the marketplace right now b/c sapphire increasing capacity?A: Competitors can only penetrate by lowering price and increasing brightness… capacity won't help if they can't do that.Q: Concern about handset sales flowing in wireless business. Europe weakness. How should we view their exposure to wireless market? We might be in single digit millions of handsets, even less. Exposure is extremely low in that area. When price goes down, we can penetrate into a declining marketQ: Where do we stand on 2” to 3” transition? Good progress in last month. Optimistic for late this quarter or next quarterAnother guy:Q: Nakamura impact on laser dev? No impact on Laser, he'll be working on lighting.Q: What about UV product? 2nd half FY01Hans mossman, PrudentialQ: UB – was this Nitres work? No, CREE work. Working on a follow-on increase, expect in FY2002.Q: How does this compare to sapphire in relative brightness? Customer comment: “As bright as sapphire.”Q: Traditional SiC advantage still applies? YesQ: Expectation on margins? Low to mid 50%, same range as beforeQuestions from ZaksDad:NONE
Questions from ZaksDad:NONEYep, sad but true! I followed every instruction they gave me, got the confirmation tone that my request to participate had been rec'd and everything. Then all of a sudden they are closing the Q&A and I had not been recognized. I have no idea what happended or why, other than I simply did not get to ask any of my questions.Sorry for the letdown; I was as disappointed as anybody, considering the thought and work that the entire board had put into the project.I intend to follow up with Fran as to our questions and to why I was unable to participate.ZaksDad
Yeah, I noticed that the "any questions?" opportunity lasted exactly 5 seconds. Just had to give ya a little ribbing after all that hubbub :) no offense, thanks for trying.
Zaksdad:Thank you for your diligence. :) I want to buy more cree and may try to do so tomorrow. I had to do some legal work and then I found out about the alleged attack of one of our ships. Let us hope for peace and an up market.
as william o'neill pointed out in todays investor's business daily, the nasdaq is in its WORST correction since 1977-78. (!!) and it isn't likely to get better soon.if you're like me, your portfolio has bled significantly. and i know that many of you sniff at anything other than "buy and hold long."however, it IS widely accepted as foolish (by the gardner bros) to sell a security when you can put your money in a better place.given that cree has posted some ongoing great numbers AND pulled off a coup by getting nakamura, this is what i'm planning on:1) sell some of my bleeders for a loss.2) take a tax write off for fiscal 2000.3) use proceeds to buy more cree.good luck.fred"caveman2"
Great job, marimba.Staff additions: Dr. shuji nakamura, working on a part-time basis exclusively for CREE lighting (is it just me, or did he totally deadpan this announcement….)I've heard folks get more excited when introducing an employee-of-the-month. ;) When he talked about him later in the CC, Neal went out of his way to say how much Nakamura would help Cree, without violating any non-disclosure or intellectual property agreements he had with his "former employer." I wonder if he's trying to avoid showing too much glee to keep Nichia's folks from jumping out of their shorts?orangeblood
Thanks all for the reccomendations on the CC notes; I think 28 is a personal best for me. That's not bad just for jotting down the words of some smart folks and publishing them for other smart folks to read. Hmmmm... I think there's a take-home lesson there *scratching head*. Oh! I know! I should make my kids take speed typing lessons for 2 years like I did :)
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