Cree Inc. (NASDAQ: CREE) reported a wider loss in the fourth quarter due to higher costs and expenses. Despite the results exceeding analysts’ expectations, the energy-efficient lighting maker issued weak guidance for the first quarter of 2020.

Net loss was $34.6 million or $0.33 per share compared to a loss of $28.9 million or $0.29 per share in the previous year quarter. The company has been spending on research and development as well as on sales, general and administrative expenses for promoting its products.

Adjusted earnings decreased by 21% to $0.11 per share, which remained within the top end of its updated guidance range despite the challenging operating environment. Revenue fell by 5% to $251.2 million.

Cree Q4 earnings review
Photo Courtesy: Cree / Facebook post

Looking ahead into the first quarter of 2020, the company expects revenue in the range of $237 million to $243 million and loss per share in the range of $0.43 to $0.39. The adjusted loss are anticipated to be in the range of $0.07 to $0.03 per share.

For the fourth quarter, Wolfspeed revenue grew by 22% year-over-year helped by higher demand for silicon carbide and gallium nitride materials, and power devices and RF devices based on silicon and wide bandgap semiconductor materials. However, LED Products revenue dropped by 25% as the company experienced a lesser demand for LED chips and LED components.

Read: HP Q3 earnings preview

The company said its fourth-quarter results were hurt by the decision of the US Department of Commerce to add Huawei Technologies and 68 of its affiliates to the “Entity List” and softness in the LED market. Cree believes that its long-term outlook remains unchanged while the Huawei ban and softness in the LED market will continue to impact the sector in the short-term.

According to a report from Grand View Research, the global residential lighting fixtures market size is expected to reach $21.17 billion by 2025. A prominent trend is likely to continue backed by the rapid replacement of traditional lights with more energy-efficient and economical lighting fixtures. LED and OLED product segment is expected to account for a market share of 59.3% in terms of revenue by the end of 2025, owing to the excellent energy efficiency of the products.

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