DURHAM – Shares in LED, power and semiconductor technology conglomerate Cree jumped shortly after its latest quarterly earnings report topped Wall Street expectations for revenue and earnings. The Street-beating performance came despite a bottom-line impact from tariffs.
“With respect to the tariffs in effect at this time, we target the combined impact will reduce Q2 earnings by $0.03 per share, consistent with prior guidance, and will reduce Q3 earnings by up to $0.05 per share,” said Cree Chief Financial Officer Neill Reynolds in a conference call with analysts.
“The additional impact targeted for Q3 relates to tariffs applied to some of our Lighting Products that went into effect in September 24. We are evaluating ways to further mitigate the impact of these tariffs.”
Cree’s stock (Nasdaq: CREE) rose to nearly $40, up more than 6 percent from Tuesday’s closing price of $37.54.
Earnings came in at 22 cents, nearly double the 12-cent expectation, according to business news site SeekingAlpha. Earnings a year ago were 4 cents a share.
Cree’s revenue surged more than 13 percent year-over-year to more than $408 million, slightly above expectations, SA added.
“Fiscal year 2019 is off to a strong start, with first quarter non-GAAP earnings per share that exceeded the top end of our target range driven by another quarter of robust growth in Wolfspeed combined with strong gross margin improvement in LED Products and Lighting,” said Gregg Lowe, Cree’s CEO, in a statement.
“This is an excellent result given the headwinds facing the businesses related to tariffs and global trade tensions. While these headwinds may persist for some time, we remain optimistic about the opportunity to increase shareholder value over the long term by executing our strategic plan.”
Looking ahead, Cree said revenue would range between $398 million and $418 million with earnings in the 15- to 19-cent a share range.
