Cree Restructures LED Business

Cree, a market leader in LED lighting, today announced that the board of directors has approved the following:

  • A restructuring of the LED Products business

  • A $500 million stock buyback authorization for fiscal year 2016

  • The fiscal year 2016 annual operating plan that targets:

    • Revenue to increase to $1.8 billion +/-

    • Non-GAAP operating margin increasing to approximately 8%

    • Free cash flow of approximately $75 million

Due to recent LED market trends that have resulted in higher LED average selling price erosion than previously forecast and the continued under-utilization of Cree’s LED factory, the company has decided to restructure the LED Products business to reduce excess capacity and overhead to improve the cost structure moving forward. Additionally, the company is increasing LED reserves to reflect the more aggressive pricing environment experienced in the current quarter, and to factor in a more conservative pricing outlook for fiscal year 2016. The restructuring charges are targeted to be approximately $85 million and the anticipated amounts by category are as follows, including what will be included in GAAP and Non-GAAP results:







Channel revenue reserves


Inventory reserves




Total Restructuring charges




The company anticipates that the majority of the capacity and overhead related charges will be reflected in operating expenses for the fourth quarter of fiscal year 2015 ending on June 28, 2015 (“fiscal Q4”), with the balance in the first half of fiscal year 2016. The company anticipates that the channel revenue reserves will be reflected as a reduction of revenue in fiscal Q4, and the inventory reserves will be reflected as an increase in cost of revenue in fiscal Q4.

For fiscal Q4, the company now targets revenue to be approximately $375 million, which includes the $27 million revenue reserve discussed above.

  • Lighting Products revenue is targeted to increase slightly sequentially, as strong growth in commercial lighting is expected to more than offset a greater-than-targeted seasonal slowdown in consumer bulb sales.

  • Power & RF Products revenue is tracking in-line with the company’s targets for fiscal Q4.

  • LED Products customer unit demand is generally in-line with our targets for the quarter; however, the combination of the revenue reserves and lower pricing in the quarter is forecast to reduce fiscal Q4 revenue by approximately $35 million.

  • Overall gross margin and operating margin are now forecast to be lower than previously targeted due to the restructuring costs, the more aggressive LED pricing environment, and the larger than targeted seasonal slowdown in consumer lighting.

  • During fiscal Q4, the company completed the previously announced $550 million share buyback program by repurchasing 4.8 million shares of its common stock at an average price of $33.37 per share, with an aggregate value of $160 million. For fiscal year 2015, the company repurchased 16.0 million shares of its common stock at an average price of $34.33.


Disclaimers of Warranties
1. The website does not warrant the following:
1.1 The services from the website meets your requirement;
1.2 The accuracy, completeness, or timeliness of the service;
1.3 The accuracy, reliability of conclusions drawn from using the service;
1.4 The accuracy, completeness, or timeliness, or security of any information that you download from the website
2. The services provided by the website is intended for your reference only. The website shall be not be responsible for investment decisions, damages, or other losses resulting from use of the website or the information contained therein<
Proprietary Rights
You may not reproduce, modify, create derivative works from, display, perform, publish, distribute, disseminate, broadcast or circulate to any third party, any materials contained on the services without the express prior written consent of the website or its legal owner.

NF2W585AR-P8 is a dual function LED that provides both white light and high doses of energy geared for inactivation of various prevalent bacteria. With a 405nm wavelength1 die known to be effective in sterilization, this LED can be used t... READ MORE

  The 5050 LED is replacing the 3535 LED, which has long been the leader in the outdoor lighting market. The existing ceramic-based 3535 has excellent reliability but is expensive. At present, the 5050 LED, which has achieved remarkable p... READ MORE