Cree’s Fix

February 26

Cree’s Craig Atwater, Vice President of Marketing and Product Management spoke about fixing the Lighting Division.   The focus of the plan is as follows:

  • Driving quality in all processes.   Cree has implemented process improvements that will  allow them to focus on new products. They have added much more rigorous controls in their supply chain and added a state-of-the-art reliability lab.  They are now testing and qualifying products in away they could not do previously. It’s early but Cree is seeing early indications of success that issues are being fixed before products ship.
  • Focus on channel and improve relationships.  Specifically Cree is giving agents tools to focus and sell, and is making it easier for them to drive specifications.  In addition Atwater stated they are addressing long lead times and that Cree has increased ‘field selling resources’ by 75% over the past 12 months. (I assume this means they have signed larger agents with more feet on the street.)
  • Get back to what they are good at—developing new products.  With product quality issues behind them, Cree can redeploy teams back to new product launches.
  • Increase margins to industry norms.  Margins today are around the 20% range and they are going to get that back up to 33%.  Cree has re-prioritized their product pipeline and to increase demand and margins.   Early indications with recent new product introductions show gross margin in the low 30’s.

Very little discussion on M+A activity. CEO Greg Lowe stated they wanted to first fix the problems, then they could consider M+A.