And this time, it's not from me. :-)I received this in an email from someone who isn't (yet) registered, and asked his permission to post it here. (I did some slight editing for readability.) Any comments are welcome:==========re: post 2575 on TMF,I haven't played with foolish theory much but, I thinkthat a lot of the problem in defining CREEwithin the parameters discussed is that CREE haspotentially captured so much, so early that itis very difficult to compare. I think of CREE asbeing a conglomerate that is already showingmany of it's eventual business segments, as opposed toa GE that started with few areas and broadened outthrough luck, timing, and an excellent managementhistory.CREE, through luck, timing, beneficial govinterference (rare example), and seemingly highqualitymanagement has captured a place in the marketplaceroughly equivalent to an imaginary situationin which Intel had invented the process to economicallyproduce silicon wafer(with IP rights), and had animmediate and mature, but growing market to sell to.If broken down into different business segments, it'ssurprising how powerful each of these businessesmay become;CREE Materials: The only company in the worldproducing "virtually defect free" electronic gradesilicon carbide wafers (The quote is from Pengally at Key West, this week restated by hunter in Boston, they refer to the two inchsubstrate), a material that the electronicsindustry has recognized as a superior material andaggressively sought after for nearly fifty years. Westinghouse demonstrated a 3 inch SiC crystalseveral years before CREE..they now buy from CREE,Same thing with Northrup Grummon. ABB, andSiemens have been trying for a long time..they buyfrom CREE. I think that some of these companiescould produce. Just not at a good price, and notwithout infringing on CREE's patents. Hunterbelieves that they are at least 6 years ahead of anycompetition. CREE also has done work withAlN and diamond film on SiC. The "holy grails" of thesemi materials industry were, and still are;bulk single crystal diamond, bulk single crystal SiC,bulk single crystal AlN, and diamond films.Pretty much in that order.CREE Lighting: CREE sells LED chips for less than thematerial cost for sapphire based chips.Hunter says that while it may be difficult, theyintend to deflate the price of nitride basedLED's by %50 in the next year while maintainingcurrent profit margins. All this while improvingbrightness to be the brightest in the world (Hunteragain). Because the majority of applicationsfor b/g/w LED's are extremely price dependant, thegreater share of the market that all the otherplayers are supposedly drooling over cannot be reacheduntil LED chips are sold for less than 10cents apiece and produce at least 10L per watt. In aresearch report, Banc of America opined thatCREE was close to 10 lumen per watt. CREE's cost ofSELLING a LED chip to include SG&A is about18 cents. According to UTCI (the only sapphire basedcompany to ever give a public estimate) thematerial cost alone of a single chip, for them is "20- 40 cents", per the CEO. The only current,credible threats are a sudden breakthrough in bulksingle crystal GaN growth, or GaN Pendeo epion Si. Thus far, bulk GaN isn't working, and by thetime Nitronex gets GaN on Si chips to market(if ever), CREE will be selling b/g/w chips under 10cents. To be successful (and not a temporary cashcow), this portion mustsell at commodity levels but, CREE is on the growthramp with this future commodity and can divestit after it matures as a very large company on it'sown, or keep it as a slow growth cash cow foran even bigger conglomerate.CREE Microwave: In the intermediate term, by far themost potentially explosive segment. Of current substrates, SiC has the best demonstratedlattice match for GaN, and dissipates heat verywell, allowing higher temp operation. GaN is neededto push the frequency bands above currentmaterials and, it is needed now. GaN on SiC allowsall of the high power infrastructure to have fewer components, thus making them smaller, morereliable, and cheaper. Also, with currentcomparable technology, the push to higher freq bandswill require GaN in the handsets/PDA's also.CREE Power: Perhaps the most important segment forCREE but, most of CREE's growth may very wellhappen before this becomes their killer product line(market willing). While initial products may be available very shortly, mass use by utilitiesmay be a couple of years out (they have atendency to only upgrade as the old equipment breaksdown), current "growth" attempts by utilities,and a potential oncoming energy crunch may speed thissomewhat. A very important caveat; electricvehicles could benefit greatly from SiC, and Detroitmay move faster than the utilities (while a great deal of this advantage belongs under "CREELighting").CREE Logic: (hasn't been formed by the company, yet).Exceptionally non volatile memory.SiC may offer benefits with complex logic circuits asengineering demands increase, as some ofthe love affair with computers that need to babiedsomewhat declines, and the demand for veryrobust semi's that will operate reliably without beingcooled even when embedded in cars that sitin the sun in Georgia during the summer. Not tomention simple logic chips embedded directly inthe engine/motor, transmission, aircraft engines, etc.Each one of these separate companies easily supportcurrent market valuations, IMO. CREE is asuper conglomerate in the making. It is now theirgameto lose.
I have enjoyed the information on Cree. I have looked at this company for a while now and think that is has great prospects. My concern however is that its ROE does not look too great. I wonder if you have any opinion on this. Any help would be appreciated.
That "anonymous" message was excellent. Makes me want to buy more right now. Get that Creetin registered, dammit!!; )P.S. Unless I discover something I have to have, my next cash infusion will be going to CREE. I need more!!!P.P.S. I smell another August split coming.
markoose wrote:P.S. Unless I discover something I have to have, my next cash infusion will be going to CREE. I need more!!!I started looking yesterday at GlobalStar (GSTRF). Today it went up over 20% !!! Sometimes I feel like I am being toyed with....But I sure do love me that Cree! I think I have enough, though, proportionally speaking. (Please don't hate me because I'm heretical.) ;^)
Does anyone have any insight as to whether or not SiC has any optical properties? Any and all answers appreciated. My second post here, Roughbeast
Roughbeast writes:Does anyone have any insight as to whether or not SiC has any optical properties? Any and all answers appreciated. Are you speaking in the chemical sense of stereoisomers or do you mean suitable as a material for optics? I poked around on the web to find some answers but was unable to find anything that directly answered either of those questions. From my readings, it appears that SiC as a crystal by itself has a tetrahedral or hexahedral symmetrical structure so chemically it would not be considered optical. As far as physically optical, well, we know that SiC crystals can be cut into diamond surrogates (popularly called Moissanite). That means it's transparent and could conceivably be cut into lenses if anyone ever determined that this were the solution to any existing optical engineering problem (which I do not believe to be the case).It's important to remember that SiC needs to be doped with other ions in order to have the commercially needed electrical properties. When we talk about CREE's products we are not actually talking about SiC crystals but crystals based on an SiC matrix. Some understanding of crystal-matrix doping provides valuable background toward understanding semiconductor function and fabrication.
Does anyone have any insight as to whether or not SiC has any optical properties?You can see through it. Someone is bound to make an interesting electronic device based on this.
The reason the ROE is sub-par right now is because of the secondary offering back in January. Shareholder's Equity jumped from $142 M in December to $426 M in March while Net Income rose from $5.8 M to $9.2 M. This dilluted the ROE calculation significantly.A lot of the cash generated from the secondary is currently sitting idle in various short term investments and the balance is going to finance the new factory.You might want to take a stab at calculating ROIC from the assets side and exclude the investments. I haven't tried this yet, but I'm fairly sure that it'll be better than the ROE.Marv
This article explains some of the differences in light refraction between moissanite and diamonds.http://infoseek.go.com/?win=_search&sv=M6&lk=noframes&nh=10&ud9=IE5&qt=cree+research&oq=&url=http%3A//cbc.ca/consumers/market/files/scams/moissanite/index.html&ti=Market+Place+Files+-+Moissanite&top="Glass is a singly refractive material, as are cubic zirconia, garnet and diamond itself. Synthetic moissanite is doubly refractive. This means that a ray of light passing through this sort of gem is slowed, bent and split in two as it passes though the medium."I don't know what this characteristic means optically.My first reaction is that it is not desireable, unless the splitting could be controlled somehow.Good Luck.Paul
Click on "How can I spot Moissanite?" when at the link mentioned in my previous post.Good Luck.Paul
Thanks Madmarv. I have been following Cree for some time. It sounds like a great story but this was one piece of the puzzle I was not really sure of. When it dropped to around 100 earlier this year I hesistated because I wasn't sure and now I am kicking myself. Will eventually get in I'm sure.
As long as we are on the topic of theoretical alternative uses for SiC, has anyone heard about this material being used for watch crystals? I would think that the hardness of SiC would lend itself to that application and even hold advantages over the traditional use of saphire wafers.And there are a LOT of new watches out there. . . . Y365
Just took a whirl at the ROIC calc. Here's what I got.TTM Operating Income $29.9MLess 35% tax 10.5MAfter tax Op Income 19.4MInvested capital computed from the following: IC = Total Assets - Current Liabilities - Cash - ST Investments - LT Investments + Account Payables Qtr ICJune 99 94 MSep 99 98 MDec 99 108 MMar 00 129 MAverage IC 107 M ROIC = 19.4 / 107 = 18.1% Notes:CREE has no Debt so all Current Liabilities are deducted.As a compromise to excluding all cash & equivalents I added back just enough cash for CREE to cover their payables.LT investments were excluded from IC because they were purchased w/ money from the secondary offering. Adding them back in dillutes ROIC to 15.3%Marv
TTM Operating Income $29.9MLess 35% tax 10.5MAfter tax Op Income 19.4MInvested capital computed from the following: IC = Total Assets - Current Liabilities - Cash - ST Investments - LT Investments + Account Payables Qtr ICJune 99 94 MSep 99 98 MDec 99 108 MMar 00 129 MAverage IC 107 M ROIC = 19.4 / 107 = 18.1%
Thanks for doing the math. 18% isn't bad at all, but how can this be used to judge if the stock is either fairly valued or overvalued? I've been reading up on ROIC, getting ready to try to put it to use, but I've missed the relationship to value somewhere. Any chance you'll do the last couple quarters/years ? :) It'd be interesting to see how it fluctuates.pablo
"Thanks for doing the math. 18% isn't bad at all, but how can this be used to judge if the stock is either fairly valued or overvalued? I've been reading up on ROIC, getting ready to try to put it to use, but I've missed the relationship to value somewhere."I'm not sure if there is a relationship between ROIC and valuation. It is just used as a measure of management's effeciency to leverage the capital at their disposal. Indirectly, a company whose ROIC is declining should tell you that there are possibly more problems beneath the surface. I'll post my analysis of CREE's financials separately.Marv
Previously, on channel CREE...Does anyone have any insight as to whether or not SiC has any optical properties? Any and all answers appreciated....From my readings, it appears that SiC as a crystal by itself has a tetrahedral or hexahedral symmetrical structure so chemically it would not be considered optical.Actually, SiC can come in a variety of crystal structures. I'm not sure which is/are being exploited by CREE, since they're doping it up for the solid-state electronics, but crystal structure alone doesn't determine the optical properties. Mostly, it's the electrons' behaviors within a particular crystal structure that determine this. Believe me, reliably predicting what they will be for a given crystal structure is a difficult problem, and has only really possible within the last decade.I know, not really on topic, but it's likely that profit-making from optical applications are likely to rely on "non-linear optical" properties, much like the frequency doubling sapphires used to turn YAG infrared laser light into bright green laser light. I've even seen it used in green laser pointers.clasota
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