Cree … Different than the Rest?

Living here in Raleigh, just minutes away from Cree (located in Durham), creates opportunities to receive additional press coverage on Cree.

Last week the Triangle Business Journal had an article on Cree titled “Four reasons Durham’s Cree is on track to keep growing.”  Article highlights / comments included:

“Cree is on pace to generate a 20 percent revenue growth for fiscal years 2014 and 2015 according to analyst Andrew Huang, summing up his management meetings. He predicts an operating income growth during that period of between 20 and 25 percent.

There are four points driving his optimism:

• Cree’s targeted approach: The analyst points out that Cree, unlike incumbents Acuity, Philips, Cooper and Hubbell, is targeting contractors in the lighting space – not lighting agents. As the likes of Philips are focused on selling through lighting agents because “their product breadth supports their positions of relative strength in this channel,” he writes.  Instead, Cree is targeting its efforts at electrical wholesalers and distributors such as Graybar and Wesco, high-volume stock-keeping units.  “We think this strategy makes sense,” he says. “Cree is NOT avoiding the agent channel; it is simply more broadly diversified.”
• Falling component prices: Cree first started offering consumer-priced LED products at Home Depot early last year, starting with its $9.99 bulb. And component pricing is starting to improve as demand catches up with supply “which could lead to more favorable pricing.” “Following three years of absorbing excess capacity, LED chipmakers may finally be in a position to start making money.”
• Cree’s growing brand:  Cree is using gross profits from that Home Depot bulb business to build its brand.  “The first wave of advertising was focused on ESPN, while the second wave has broadened out to HGTV, targeting both do it yourself-ers and women,” he writes. “If the bulb business doubles over time, then Cree may be able to back off on some of its branding spend.”
• Cree’s potential buys:  While “there is nothing in the works near-term,” acquisitions are a likely way Cree will address the $1.2 billion on the company’s balance sheet – likely in lighting business.”

And remember, this is one analyst’s opinion.

So, we put it to you, the channel …

• What do you think about Cree’s strategy, according to the analyst, of not “selling through lighting agents”? (yes, I do know that they do sell through lighting agents) and a desire to sell to distributors “such as Graybar and WESCO, high-volume stock-keeping units”?
• Will the decline in component pricing be pushed through to the channel, and end-users, to drive more adoption?
• Cree’s brand awareness continues to grow but, if you’re a consumer-oriented product (lighting) and there are X billion lamps to replace, will they back off on branding for awhile?
• Whom could you see Cree acquiring? What would make sense?

How do you perceive Cree? If you could make 1 suggestion to Cree, what would it be?