Cree Cuts 70 Total Jobs after Reporting Disappointing Financial Results
U.S. LED lighting manufacturer Cree announced a layoff of around 70 jobs across its local operations and at its headquarters in Durham, only days after it announced disappointing earnings report.
According to The Journal Times, Cree issued a statement on Wednesday saying “Cree took workforce actions primarily in its Durham, N.C., and (Sturtevant) facilities today affecting approximately 70 employees in our lighting business and IT organization, which represents about 1 percent of Cree’s employees."
“These actions are in response to current business conditions. Where possible, the overall impact of this action was reduced by offering alternative positions within the company. Cree continues to invest in the lighting business and to hire according to business needs and conditions.”
Cree refused to further comment on the decision.
The layoff followed Tuesday’s quarterly financial results in which Cree reported a US$99 million loss in its third quarter of fiscal 2017. Lighting products revenue fell 18% to US$154 million.
During the earnings call, CFO Mike McDevitt pointed out the lower commercial revenue, caused by seasonal slowdown in consumer sales, also resulted in factory underutilization which, along with the higher warranty reserves, caused a decrease in gross profit and margin.
A lower win rate on quoted projects due to supplier quality issues on product components in the second quarter and an overall slowdown in lighting market also led to the recent revenue trend, said Daniel Castillo, Cree president, lighting.
“Given the current state of our lighting business, we have reevaluated the business to identify spending that is not aligned with our current growth strategy,” McDevitt said, while Cree will continue to invest in key areas such as smart lighting to drive long-term growth. He added that, during Q4, the company would be “taking action to remove certain costs that are targeted to yield an $8 million annual benefit.” The financial benefit of the “right-sizing initiative” is expected to be fully realized in the first quarter of fiscal 2018.