$160 Million deal, Cree and Sumitomo

This is for just the die that go inside LEDs...
http://www.cree.com/News/news197.asp

Durham, NC, May 18, 2004 - Cree, Inc. (Nasdaq: CREE) today announced that Sumitomo Corporation has agreed to purchase $160 million of Cree?s light emitting diode (LED) products during Cree?s fiscal year ending June 2005


Gee, thats an awful lot of LED die, as the die go for only pennies each.

I was hoping that this would be the release of XLamp parts to market. I'd like to see Cree's entry into the high-power LED market.

maybe the delay is because Cree does not want to compete against their own customers... what IMHO is good sense.

my 2 cents (of peso)

Pablo

[ QUOTE ]
the ability of Sumitomo to decrease or terminate its purchase commitment under certain circumstances, so that the actual amount purchased may be substantially less than $160 million, and its ability to rotate limited quantities of inventory acquired under the agreement; the rapid development of new technology and competing products that may impair demand or render our products obsolete; the potential lack of customer acceptance for the products; and other factors discussed in Cree's report on Form 10-K for the year ended June 29, 2003 and subsequent reports filed with the Securities and Exchange Commission.


[/ QUOTE ]

1. CREE's stock jumps dramatically from this sales forecast.
2. This allows CREE to spend millions in increase tooling, development and output.
3. If the orders fall way short, the stock takes a dump. But CREE still ends up with higher production capability and better tooling.
4. Sumitomo Corporation still gets the parts at a much lower price this way but never paying near the $180 million.

This is all smoke and mirrors allowing stock holders to foot the bill on a win/win deal between CREE and Sumitomo Corporation.

After further reading, it seems that the XLamp is just the packaged version of the XBright chip.

Ah, marketing fluff.

I should stick to my habit of never reading press releases.

The production machines for the 1W LEDs are running.

FYI, customers of CREE include folks like OSRAM, Kingbright, Sharp Corporation, Vishay, Stanley Electronics, Citizen Electronics, Rohm, etc. They buy the die from CREE.

In June 2003, CREE employed 1,121 people.

http://www.cree.com/Products/led_man.asp

Details on their revenues and such are here:

http://www.cree.com/News/news_index.asp

Details on the company are in this report:
http://www.cree.com/ftp/pub/cree_annual2003.pdf

For fiscal year 2003, Sumitomo's advance purchase commitment was 23 million, and Sumitomo's actual purchases were $54.6 million. For fiscal year 2004, Sumitomo's current advance purchase commitment is approximately $100 million. Sumitomo is an Asian distributor of CREE die for the Asian LED manufacturers, in 2003, 20 Japanese companies used the CREE die. Sales to OSRAM Opto Semiconductors and Agilent were 21% and 10% of revenue.

As of June 29, 2003, CREE had a backlog of ~$68 million.