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No. of Recommendations: 11
Hello Creeheads,
I was looking over posts on this board from last earnings season. I don't know if we have discussed this yet but what happened this quarter is almost exactly what happened last quarter. Great earnings... positive conference call and then one little comment by the CFO that the press runs with and the stock price tanks. Last time it was a comment about sales growth. This time it's gross margin. Here's the notes from ZaksDad from the last conference call.

It's interesting that ZaksDad called Cynthia Merrell's comments "the greatest part of the call".

Because later Tinker thought that those comments were why we sold off.
Here's some comments from Tinker about what caused the sell off.

Rat made another of his hated and yet weirdly accurate technical calls and his prediction came exactly true on Friday. nicecallrat.

Flash forward 90 days. Another great quarter. There is great joy in Mudville. But the stock tanks again. Again a very positive conference call. Again Cynthia Merrell says something at the conference call that is misinterpreted or exaggerated. This time though it's gross margins. Hey listen... I'm with you guys that CNBC should check things out a little more! But it is info-tainmant after all. I still love Joe Kernen's Get Smart jokes. But as far as the CREE story goes he "missed it by that much".
Anyway all I can say is I feel really bad for Cynthia. I'll bet she's taking some heat for this. Almost all great companies do issue conservative guidance and that's all she is doing. Both statements she made were not negative. So I'm really defending what she said in this post. But at the same time I'm making an observation. I think if I were Cynthia I would just take the night off during the next conference call. Sometimes you just can't win for losing. Go out for a nice walk or something. And Cynthia... if you happen to read this... don't worry about it. In the long run it will all be about how CREE actually performs. This will pass. So keep your chin up and keep doing a good job. Don't worry about what the press has to say.
still long
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No. of Recommendations: 4
It's interesting that ZaksDad called Cynthia Merrell's comments "the greatest part of the call".

And here's the rest of the story . . .

CREE was running full production 24/7 and they had just come off a year that saw close to 100% revenue increase. The call for 60% revenue growth, as a long time CREE follower, I suspected/knew to be conservative, but was piggybacked on full production capacity.

Yes, CREE was in the process of building new facilities, but those were not scheduled to come on line for almost a year.

Here was revenue guidance that was going to squeeze 60% more revenue out of already constrained facilities.

The end result of the call was that they were right, sort of, because they grew revenue at 80% YOY and 14% sequentially. 14% sequential growth quarter after quarter is a 69% annual growth rate. Pretty close to right on their target, and all still from constrained production facilities!

Yes, I did think it was the greatest part of the call!


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No. of Recommendations: 0
That's the interesting thing about this whole situation. Both conference calls the CFO makes a comment that we as investors view as a positive and yet those not familiar with the company view the comment as negative.
I didn't listen to the call myself but I reckon I should. Perhaps there is something in the way the CFO is delivering the news that is making it sound negative. Did you notice any sort of nuance in her tone of voice?
I brought this up because to me it is an incredible coincidence. Not only that it happens two quarters in a row but that it's a comment by the same person.
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