Analyst Alex Gauna believes LED segment pressures, which make up more than 50% of Cree's revenues, are the primary cause of the shortfall -- with Asia in particular impacting the outlook. He thinks competitive pricing pressures may continue near term as economic conditions slow and as capacity ramps.
He cut his $57 million Q4 revenue estimate to $45 million, and cut the $0.20 EPS to $0.14. Guana also reduced his $265.5 million fiscal 2002 (June) revenues to $185 million and trimmed the $0.87 EPS to $0.60.
Additionally, he cut the $80 target to $25. However, he reiterates his buy rating; says Cree continues to be a solid long-term growth story, driven by LEDs moving into new applications and platforms and the emergence of other power opportunities.