Cree off 6 1/2% on Cut in Guidance (CREE)

The stock is down $3.30 (6.73) at $45.70 in early pre-market trade.
From the company: 

Cree Updates Financial Targets for the Third Quarter of Fiscal 2011

Cree, Inc. (Nasdaq: CREE), a market leader in LED lighting, today announced revised financial targets for its fiscal third quarter ending March 27, 2011. Revenue targets have been reduced to a range of $215 million to $220 million primarily due to lower sales of LED chips and LED components.

“Despite the challenges we faced in Q3, distributor sell-through has improved and we target solid growth next quarter. Based on our preliminary outlook for Q4, we are currently targeting revenue to increase 10 to 12% in fiscal Q4 led by growth in LED components.”

• LED component demand is improving post-Chinese New Year, yet revenue is lower than originally targeted. It has taken longer to work through customer inventories than previously anticipated and pricing was lower than the company had previously forecast.
• The LED chip business is also weaker than targeted due to more aggressive pricing and weaker demand.
• Gross margin for the quarter is expected to be approximately 43%. The decline in gross margin targets is attributable primarily to increased pricing pressure in the LED chip product line.
• Operating expenses are expected to be slightly lower than previously targeted.

“The LED components business appears to be turning the corner,” stated Chuck Swoboda, Cree’s CEO and chairman. “Despite the challenges we faced in Q3, distributor sell-through has improved and we target solid growth next quarter. Based on our preliminary outlook for Q4, we are currently targeting revenue to increase 10 to 12% in fiscal Q4 led by growth in LED components.”

The company plans to hold a conference call and web broadcast today at 9:00 a.m. U.S. EDT to discuss these updated targets. The dial-in number for the conference call is 800-374-1789 (973-200-3386 international) and the conference ID is 54519724. The conference call will be available to the public through a live audio web broadcast via the internet. Log on to Cree’s website at www.cree.com and go to “Investor Relations – Financial Events and Presentations” for webcast details. The call will be archived and available on the website through April 6, 2011...