Cree Faces Dying LED Growth, From Bad to Worse (CREE, VECO, AIXG, RBCN, LEDS)

Talk about leaving a bad taste in your mouth… Cree Inc. (NASDAQ: CREE) is getting hit again on lower earnings guidance and shares may in fact be hitting 52-week lows. The problem is that this could represent yet more evidence that the LED sector has peaked in its growth.  Cree sees quarterly revenue now coming in a range of $215 to $220 million versus a pervious forecast of $245 to $265 million.  It also lowered margins down to about 43% from 46% previously expected.

Cree’s guidance was lower on weak demand and weak pricing, both of which are far worse than mere ‘order pushouts’ and sales timing.  The company has also noted that Asian inventories are taking longer to work through.  Cree is trading down over 8% at $44.95.  That is very important because the 52-week trading range is $45.48 to $83.38.  We are seeing shares of  Veeco Instruments Inc. (NASDAQ: VECO), Aixtron AG (NASDAQ: AIXG), Rubicon Technology, Inc. (NASDAQ: RBCN), and SemiLEDS Corporation (NASDAQ: LEDS).

Veeco Instruments Inc. (NASDAQ: VECO) is down over 5% pre-market at $46.72 and its 52-week trading range is $29.54 to $54.50.

Aixtron AG (NASDAQ: AIXG) is down 3.3% at $40.32 and its 52-week trading range is $22.42 to $44.96.

Rubicon Technology, Inc. (NASDAQ: RBCN) is down 3.25% at $25.70 and its 52-week trading range is $17.65 to $35.90.

SemiLEDS Corporation (NASDAQ: LEDS) is down 4.8% at $15.70 and its 52-week trading range is $14.54 to $32.12.

This represents what may be the death of growth in the LED market if Cree is representative of the full sector.  With a new range of $215 to $220 million in revenues, here were the most recent four quarters (most recent first) of revenues: $256.983 million; $268.437 million; $264.599 million; and $234.083 million.  Another great growth industry hits skid row.

JON C. OGG