Stocks in the LED light space suffered a serious setback during the past two months, but there was a silver lining on Thursday. There was more bad news of the type that has caused stocks -- including Cree(CREE_) and Veeco Instruments(VECO_) and Aixtron(AIXG_) -- to sell off, but on Thursday, the activity in the LED stocks was muted.
The LED stocks , even though occupying specific niches within the lighting market, have traded as a momentum basket in recent months -- yet it seems with the lack of reaction to more bad news on Thursday, the LED stocks are at least poised to ride out the next few weeks until earnings without significantly more deterioration in share value. Cree was down 2% on Thursday, but on light volume, while Veeco and Aixtron were flat in trading in the early afternoon. Cree had also recovered slightly over the past month since the late summer/early September selloff.
The oversupply in the LCD display market -- for which LED players provide 25% of the backlighting -- and consumer electronics sector weakness more generally, have been the best friends of LED stock short traders and the worst nightmare of stocks like Cree in recent trading history. Even though Cree is only exposed at roughly 10% of its revenues to the LCD panel space, its shares dropped severely as news started coming out over the summer about a slowdon in consumer electronics and an inventory problem. The same was true for Veeco and Aixtron. Even though they are equipment makers for the LED lighting manufacturers and order growth has been strong, the slowdown in the consumer electronics space weighed heavily on their shares.....MORE