Lighting manufacturer Cree's (CREE) reduced sales guidance for its fical third quarter is causing many on Wall Street to sell their shares.
The Durham, N.C.-based manufacturer of light-emitting-diode (LED) devices told analysts in a postmarket call Tuesday that its quarterly sales will clock in at $367 million, down from previous estimates of $400 million. Cree's CEO, Charles Swoboda also reduced his adjusted earnings-per-share estimates to a range between $0.13 to $0.15, from earlier expectations of $0.22 to $0.29.
"I happen to think it's General Electric (GE) taking share," Real Money's Jim Cramer said in a Wednesday interview with CNBC. "I do think that General Electric is coming in there. Cree is a little guy and GE is a big guy, and size matters." (GE shares are held in Jim Cramer's Action Alerts PLUS charitable trust and in TheStreet's Dividend Stock Advisor portfolio.)
General Electric shares have been outperforming the market over the past 12 months, climbing 23% as of opening trading Wednesday. CEO Jeff Immelt is staging a massive industrial overhaul, as GE winds down its longtime lending arm, GE Capital. And its appliance and lighting segment has been growing at a steady clip, with $8.8 billion sales booked for 2015, up more than 4% on the previous year.
"Lighting revenue is estimated at $187 million, which is 20%, or $48 million lower than we had targeted for the midpoint of Q3 revenue guidance, due primarily to lower orders driven by three primary factors: customer service disruptions related to our ERP conversion, new product delays, and weaker market conditions than forecast," Swoboda said on the analyst call.
"Some U.S. commercial lighting project business was lost due to customer service disruptions primarily related to our transition to Oracle in the quarter," he added. "The ERP [Enterprise Resource Planning system] conversion, which is necessary to support the long-term growth of our Lighting business, affected lead times, deliveries, and customer responsiveness. We believe that this disruption is mostly behind us as on-time delivery performance has improved significantly over the last month, although it will take time to rebuild customer momentum."
Cree shares are down more than 10% on the year, after falling nearly 18% in Wedesday-morning trading.
