This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Cree Diagnoses Hiccups, Stock Gets Pneumonia

Stocks in this article: CREEGESIPHG

NEW YORK ( TheStreet) -- Cree (CREE) shares plunged almost 20% yesterday, a loss of more than $1.3 billion, and you would think the company was going out of business.

It's not. The Durham, N.C. maker of LED lighting products actually did quite well. Sales rose to $375 million from $349 million the previous quarter and $307 million in the year-ago quarter. Net income nearly tripled from the same quarter a year ago, to $28.24 million. Margins improved. There's more than $1 billion of cash in the bank. There's no debt.

What panicked the street was the company's guidance, which fell below analysts' estimates. CEO Chuck Swoboda lowballed it.

There's also the fact that the company has been on a wild ride lately. Despite the drop, the company's stock price has more than doubled in the last year. From its October lows to its high of a few days ago, the price had tripled.

This created what one technical trader called a "high pole warning," a sign of trouble ahead for the shares.

Our Jim Cramer thought Cree had a "great quarter", and in many ways he was right. CEO Swoboda, 46, has been with Cree and its predecessor companies for 20 years, and he has been CEO since 2001.

Swoboda is not a Wall Street guy, he's a company guy. He's a production guy, an engineering guy, not a hotshot money guy, not a slick sales guy. He is, in short, my kind of guy, and just the right guy to be running a company like this.

The revolution inherent in Cree's lighting business is just getting started. Since LED lights, unlike incandescent bulbs or fluorescent tubes, are based on computing technology, they use a lot less energy, notes the Department of Energy, and they can be controlled by computers as well.

Over the next 15 years, the Department of Energy predicts, the switch to LED lighting will save 348 TerraWatt Hours of electricity, enough to retire 44 major power plants of 1,000 megawatts each. Cree is just now moving strongly into street lights and flood lights.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs