Cree - Meister des SiC - 500 Beiträge pro Seite

[AndyBusch]

Hallo CREE-Freunde
M.E. sollten wir im EX-SAC board einen thread zu CREE aufmachen. Die Diskussion erfolgt teilweise im Übertragungstechnik-Thread, wobei man darüber diskutieren kann, ob sie da gut aufgehoben ist.

Den Beginn möchte ich mit einem Top-Artikel von Rex Moore aus dem MF machen. So stelle ich mir Analysen vor: Perspektiven, Visionen, Geschäftszahlen und auch Risiken.

http://www.fool.com/Server/FoolPrint.asp?File=/specials/2000…

A Foolish Treat
Cree By Rex Moore (TMF Orangeblood)
October 24, 2000

Trading at $90 7/16 as of October 23, 2000

I first ran across Cree, Inc. (Nasdaq: CREE) in March 1999 when it debuted on the Foolish 8 Spreadsheet at a price of $21.22 per share. (The spreadsheet lists all stocks that meet the eight criteria for promising small-cap companies, as laid out in The Motley Fool Investment Guide.) By the time I finished my research and purchased the stock, the price had risen to almost $40 per share. Now hovering around $93 per share, I offer this company to you as a Halloween treat, although its current valuation is downright scary to a lot of folks, even creepy!

Cree manufactures and sells silicon carbide (SiC) and SiC-based semiconductor devices. In fact, it`s the world leader in this area, and has built an impressive moat around its kingdom through numerous patents and first-mover status. The key to understanding Cree and its value as a potential investment is understanding what SiC is and why it`s important.

Better than silicon
Silicon revolutionized computers and other electronic devices, allowing them to be made smaller, faster, and cheaper. Heck, they even named a valley after it.

However, silicon and other alternative materials have characteristics that limit their usefulness in many applications. Silicon carbide has better heat-conducting properties and can operate at shorter wavelengths and much higher temperatures. As such, SiC is a superior material for use in power switching, microwave, RF (Radio Frequency), and other devices. It`s also very useful for making light-emitting diodes (LEDs), currently Cree`s biggest revenue producer. Other compounds can be used to make bright LEDs, but Cree`s manufacturing efficiency allows it to sell SiC-based LEDs at lower prices.

So, silicon carbide is a great material. However, it is very, very difficult to produce. Companies that want to make SiC not only have great technological barriers to overcome, they also must manufacture it without violating any of Cree`s 70 patents. In short, it`s nearly impossible without a bevy of scientists and deep pockets. Cree has 13 years of experience with the product and estimates it`s several years ahead of its nearest rival. So, in the vast majority of cases, companies that need SiC products must come to Cree.

How do they make money?
LED products are in extremely high demand and accounted for 63% of Cree`s revenue in fiscal 2000. Among the many places you`ll find Cree LEDs: wireless handsets, such as Nokia (NYSE: NOK) phones; automotive dashboards and indicator lamps; indoor and outdoor full-color stadium displays; and traffic signals. Demand is so great that the company currently has a backlog of $140 million, and it`s in the process of building more plant space to significantly increase manufacturing capacity.

Cree derives about 25% of its revenue from selling SiC wafers for use in research and development of new semiconductor applications, and the remainder of revenue comes from government contract funding for research. This revenue mix will change in the future, however, as high-power RF and microwave devices (amplifier systems for wireless communications) and power devices (industrial motor controls, lighting ballasts, etc.) hit the market.

Cree also is hoping to offer blue and ultraviolet lasers for high-density optical storage, which would mean much more information could be packed on to CDs and DVDs.

There is also an increasing possibility that white LEDs, with their longer life and cooler, more efficient light, will replace the incandescent bulb in the future. (I`ll pause here if you want to re-read that sentence.)

Financially sound
Financially, Cree is in great shape and measures up very well to all of the Rule Maker metrics, save one (all data from latest 10-K):

Sales growth of 10% or more -- Cree easily crosses this hurdle with year-over-year revenue growth of 74%.

Gross margins greater than 50% -- It`s close, but the company passes at 51.8%.

Net margins greater than 7% -- No problems here, as Cree turns in 28.1% net margins.

Cash-to-debt ratio greater than 1.5 -- Cree has no debt.

Foolish Flow Ratio under 1.25 -- Not only has Cree finally limboed under that 1.25 bar, it`s also trending in the right direction -- 2.32 in 1998, 2.15 in 1999, and then a big improvement to 1.17 in fiscal 2000. It`s heartening to see management consistently improving in this vital area.

Cash King Margin greater than 10% -- With a CKM of -13.9%, this is the one place Cree falls short. However, there`s a good explanation. The extra manufacturing facility the company is building is greatly increasing capital expenditures, one of the components of the CKM. Once that is built out, I expect the CKM to jump higher.

As good as the story sounds, be aware that a few gremlins are hanging around that could leave you holding a bag of rocks instead of treats, especially in the short term. A delay in getting the new plant online, losing a key customer, failure to increase production yield as expected, a patent lawsuit that goes the wrong way -- any of these could take a big chunk out of the share price (even though it`s already well off its 52-week high). All of these factors should scare you into thoroughly researching this company before you invest a dime.

But, all in all, I think Cree`s future is as bright as a traffic LED. A huge demand for existing products, possibly an even greater demand for future products, and management that knows how to handle the cash flowing through its business and continually increases manufacturing efficiency all make for a sweet combination.

A Trick or Treat represents the opinion of one Fool and in no way should be taken as the opinion of either the Motley Fool, Inc., the company in question, or representative of anyone or anything other than that specific Fool`s thoughts.
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Einen Satz habe ich mit bold markiert, da man ihn sonst leicht überlesen könnte.

There is also an increasing possibility that white LEDs, with their longer life and cooler, more efficient light, will replace the incandescent bulb in the future. (I`ll pause here if you want to re-read that sentence.)
Humor hat Rex Moore auch.

Ja ich habe eine längere Pause gemacht und den Satz mehrmals gelesen, damit er ganz in meinen Kopf sickert .

grüße Andy

[AndyBusch]

sorry Leute. Scheint ein technisches Problem gegeben zu haben.
DIESEN THREAD WERDE ICH LÖSCHEN LASSEN.

Andy

[kpw]

hallo Andy, würde mich über einen cree thread freuen

kpw

[AndyBusch]

hallo kpw
du hast Recht. Nur gibt es den CREE thread 2 x, mit dem selben Text + Titel.
Also bitte auf diesem nicht weiterdiskutieren, da ich ihn heute Abend oder morgen löschen lasse.

grüße Andy