Yahoo Finance Lighting Products’ Revenue Rose to $255 Million in Fiscal 2Q16
CREE Reports Strong Fiscal 2Q16 Earnings
Fiscal 2Q16 revenue by segment
Cree (CREE) operates through three business segments based on product type, namely Lighting Products, LED (light emitting diodes) Products, and Power and RF (radio frequency) Products. In the previous part of the series, we saw that the company’s fiscal 2Q16 revenue was driven by strong growth in the commercial lighting and LED business, partially offset by softness in power and RF sales. Let’s look at the performance of each business segment and the factors that affect each of them.
Lighting Products
Lighting Products’ revenue rose 11% YoY (year-over-year) to $255 million in fiscal 2Q16 while its gross margin rose to 28.5% from 28.1% in fiscal 2Q15. The total units sold fell 3% YoY but the ASP (average selling price) rose 14% YoY due to strong growth in commercial lighting fixtures, as the fixtures command higher ASP. The favorable product mix raised both revenue and margins.
LED Products
LED Products’ revenue rose 1% YoY to $153.4 million in fiscal 2Q16 while its gross margin fell to 34.7% from 39.1% in fiscal 2Q15. The total units sold rose 7% YoY, offset by a 6% fall in ASP. This segment has been facing tough competition from Philips Lumileds, General Electric (GE), and Eaton’s (ETN) Cooper Lighting, so pricing has been low.
The company completed the restructuring of this business with factory consolidation. Moreover, the demand was in line with the company’s target. That helped reduce channel inventories, and would give way to higher sales in the second half of fiscal 2016.
Power and RF Products
Power and RF Products’ revenue fell 12% YoY to $27.5 million in fiscal 2Q16 while its gross margin fell to 52.2% from 55.5% in fiscal 2Q15. The fall was due to a 20% YoY fall in units sold. Given the softness in demand and weak macroeconomic environment, the Wolfspeed initial public offering has been delayed and is likely to take place sometime in the second half of fiscal 2016. The demand softness may also affect rival STM Microelectronics (STM).
In the coming part of this series, we’ll look at the company’s financial strength and its expectations for fiscal 3Q16. You can gain exposure in most of the large-cap funds across various sectors, including technology, through the SPDR S&P 500 ETF (SPY). It has 1.6% exposure in GE and 0.13% in ETN.
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