I wrote a few days ago about CREE (CREE: chart, web, Y!), a company that makes LED lighting components, including the lights themselves.

I feel that LED lights aren’t too far away from replacing incandescent and mercury containing CFL bulbs, and that products are already showing up on local store shelves, although prices have yet to come in at an economic range.

I’ve been perusing the companies 2008 annual report over the last couple days, and studied the financial numbers from the last several years.

Annual Revenue

As of the end of June, 2008, total revenues were on the rise to a level just shy of $500 million, with a 33.6% gross margin on revenues.

LED products (LED chips, components and lighting solutions) made up a total of 84% of total revenues, materials (SiC wafers, etc) made up just under 6% and power and RF products (power and RF switches) made up 4%.  The rest of the revenues came in the form of contracts with government agencies.

At the end of FY08, the company had $371 million in cash and marketable securities on hand and $408 million in working capital.

Diluted incomer per share was $0.36 at the end of FY08, which was down considerably from previous years, the high of which came in 2005 at $1.38 per share.

The company continued its streak of zero debt, a statistic maintained since as far back as 2004 or earlier.

The Most Recent Quarter

Naturally a lot has changed since the end of FY08 (nearly a year ago) and a FY09 report is due out in the next few months.

For Q3 ‘09, revenues of $131 million were 5% higher than the same quarter of 2008, but not surprisingly, down 11% compared to Q2 ‘09.

Operating cash flow for the third quarter came in at $49.9 million and the company generated $40.5 million of free cash flow.

The company built upon its cash reserves, increasing cash and investments to $404.9 million, and has maintained zero debt through the third quarter of fiscal 2009.

Recent News

On May 26th of this year, CREE announced that they are raising their financial targets for the fourth quarter of 2009, which is a pleasant headline to be reading in this economic environment.

The company says that the increase in targets is due to stronger LED component bookings for lighting-related applications such as laptops, displays, etc.

The company forecasts LED product sales to continue to grow into FY 2010 and will continue to spend money on R&D to make that forecast come true.

Corner Office Comments

I am more intrigued with this company the more I read.  The financial numbers look strong, and revenues have been maintained at healthy levels even in a down economy.  This could be a function of the company offering products that equate to energy savings with long product life cycles, making their products attractive to cities and municipalities (among other entities) trying to cut operating expenses when budgets are shrinking.

The zero debt is a major selling point, and the fact that the company has over $400 million in cash to work with makes the deal even sweeter.

I think this is a strong company with a promising product line.  They already market their LR6 downlight product that will replace 65 Watt flood-type recessed lights in your everyday residential application, and I suspect a replacement for traditional round incandescent bulbs is right around the corner.

I see prices coming down as LED lights gain traction in the market (LED’s have already replaced filament type Christmas lights) and CREE should be well positioned to take advantage of the next big technology shift in such a widely used market as home and business lighting applications.

The stock price has been fluctuating for the last several months, but the trend has been overwhelming positive since the beginning of 2009.

I’ll start buying some shares on the next downswing and I think the long term prospects for the stock is very promising.

Investing, Stock Thoughts, Technology CREE, LED, LED lighting, Technology

It’s tough for me to say anything negative about my Verizon Wireless (VZ: chart, web, Y!) service.

It’s always available and it’s been years since I’ve had a dropped call.  It even worked in the Caribbean when I was there on business early last year; so there is something to be said for “the network”.

The only complaint I have is the cost of the service itself in relation to the features provided.  For $59.99 per month (plus the $20 in taxes and fees) I get 550 minutes between my wife and I.  As I’ve mentioned before, we don’t even come close to using those minutes.

I suppose you could say I’m eager to see how these down economic times will shape not just technology, but pricing in the very near future.

I’d love to have something like a Blackberry, and Verizon would practically give me a device for free.  But the $70+ service is really driving me away, and that doesn’t include the additional money for the traditional cell phone service for my wife.

In a fairly recent issue of BusinessWeek, the big three in wireless service here in the United States are seeing competition accelerate as buyers of pricey services and phones have tightened their belts.

The article mentioned that the battle is heating up in wireless data service, and the desire to grow the market while bringing down prices.  AT&T (VZ: chart, web, Y!) for instance has an 8.6% share in wireless data, compared to 16.4% for Sprint (S: chart, web, Y!) and Verizon’s 10.9%.

Verizon tends to be a bit hamstrung by 45% stakeholder Vodafone (VOD: chart, web, Y!)  (popular in Europe) and Sprint has been facing a recurring challenge in attracting and retaining customers.  Service has been spotty, customer support lacking, and product lines have been thin.

AT&T on the other hand holds a 100% stake in wireless and has its fingers in a lot of different telecom markets (a la AT&T UVerse).  They’ve got a decent amount of cash and low capital requirements to maintain their infrastructure.

The Apple (AAPL: chart, web, Y!)  iPhone has almost reached cult status, and I have to admit, I’m not much of an Apple guy, but I love the idea of an iPhone (again, besides the service price) and own a iPod.

I’m going to continue watching how the AT&T vs. Verizon vs. Sprint battle plays out, but I think if prices start coming down and consumer spending starts going up, it may be worth buying some shares of AT&T.

Investing, Stock Thoughts, Technology AT&T, sprint, telecom, Verizon

Yesterday Duncan Energy Partners (DEP: chart, web, Y!) posted its Q4 earnings results for 2008, highlighting a a 58 percent increase in net income to $10.8 million or $0.39 per common unit (diluted).  Compare this to $6.8 million (net), or $0.30 per common unit for Q4 ‘07.

For the quarter, distributable cash flow increased 63 percent to $15.4 million compared to $9.4 million in the same quarter of the previous year.  All told, this represents about a 12% return.

It appears that the distribution is stable on the heals of an increase on January 9th, whereby the board of directors of Duncan Energy Partners’ general partner declared an increase in the quarterly cash distribution rate to $0.4275 per unit for Q4 ‘08.

Unfortunately, the market didn’t appreciate the earnings like I did, as the shares slid another 3% on falling crude oil prices.

While the price action was frustrating, the strength of the business is still appealing, even with a heavy portfolio of oil and gas already.  The yield is still flirting with 10% and the prospects of an ever-increasing distribution look healthy.

Flash Player 9 or higher is required to view the chart Click here to download Flash Player now

Investing, Stock Thoughts DEP, Duncan Energy Partners, earnings