The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Brian Lee - Goldman Sachs - Analyst
: Quick one just on the revenue trends here. It seems like you had some stabilization, or at least flatter trends in the LED product segment for two
to three quarters. I know you chalked it up to pricing, but wondering if you could elaborate a bit more, if there is any particular segments or regions
where it was concentrated, and whether you believe this is a call on the cycle, or more Cree-specific.
And then my second question was just around, Mike, if you can at all quantify the OpEx reduction potential in FY16 on a run rate basis from these
actions? That would be helpful. Thank you.
Question: Paul Coster - JPMorgan - Analyst
: First question really is to do with this LED weakness. You talk of unit volumes being okay, but pricing coming down. I want to confirm, it is all like
for like. It is not to do with product mix, it's all in the high-power segment. Can you quantify those two variables? And I have a very quick follow-up.
Question: Paul Coster - JPMorgan - Analyst
: It sounds like you don't actually want to share the actual ASP decline at this moment, Chuck. You're welcome to correct me on that.
Question: Paul Coster - JPMorgan - Analyst
: My follow-up question is, you are convinced this is cyclical and not secular, and you just mentioned backlighting. And that, I think resonates with
this. What else about this can you say is cyclical in nature? Was there something about the channel inventories? Is there something about the
product, the end product cycle that convinces you that it is cyclical?
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Question: Vishal Shah - Deutsche Bank - Analyst
: Thanks for taking my question. My first question is around the consumer lighting business, you mentioned you were going to see some shift in
that segment, as well. Can you talk about if you see any weakness at all in that segment, and what the mix is going to look like going forward in
that segment?
Question: Vishal Shah - Deutsche Bank - Analyst
: That's helpful, and just one follow-up on the utilization rates. Can you talk broadly about factory utilization rates, and where you think some of
these actions will go in the future?
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Question: Harsh Kumar - Stephens Inc. - Analyst
: Mike, can you give us an idea of what we should think about terms of gross margins, even EPS targets if you want to get there, give us an idea how
we should think about OpEx?
Question: Harsh Kumar - Stephens Inc. - Analyst
: No, this is for June, and also FY16 if you want to comment on it, that would be great.
Question: Harsh Kumar - Stephens Inc. - Analyst
: Okay. Then the other question was, $1.625 billion 2015 number, you're targeting $1.8 billion. That is up around 10% growth, chip business to be
flattish. I would have thought your commercial lighting business would have grown, call it in excess of 30%, maybe even approaching 40%, based
on what I've seen. Will bulbs continue to then, by inference, continue to be a headwind for you? Is that how to think about the lighting business?
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Question: Edwin Mok - Needham & Company - Analyst
: First question, have you looked beyond this quarter, with the inventory reserve that you're going to have and the price coming down, we're finishing
the quarter at a lower point. Will that result in a less than seasonal September quarter for the LED business? Any color you can provide on that?
Question: Edwin Mok - Needham & Company - Analyst
: That's helpful. Then on the consumer bulb side, you mentioned that you anticipate maybe a little slower in the coming year as you focus more on
commercial lighting. I remember you guys have added some capacity on building light bulbs as well. Is that something that you move to more
commercial production, or what is going on with that capacity?
Question: Sven Eenmaa - Stifel Nicolaus - Analyst
: First one, I wanted to ask, on your LED lighting side, how much of a gross margin improvement you would need to have in FY16 to hit your 8%
operating margin targets for that year?
Question: Sven Eenmaa - Stifel Nicolaus - Analyst
: Got it, and in terms of the LED product business, what would, in your mind, need to change for you to consider more significant restructuring, or
potential strategy changes to that business?
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