Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of LED expert Cree
So what: The company just announced a major acquisition, picking up lighting fixture maker Ruud Lighting for a net cost of $525 million in cash, shares, and beneficial tax effects. With about 40% of a full quarter left to go, the deal adds about $30 million to Cree's first-quarter revenue guidance, cuts gross margins by 1%, and adds $13 million of operating expenses. All told, it puts Cree's earnings projections at the lower end of earlier guidance.
Now what: I don't see why investors are so negative on this deal. Ruud will add to non-GAAP earnings before fiscal 2012 is over, and the tuck-in deal adds muscle to Cree's mass-market lighting ambitions. Except for OLED expert Universal Display
Interested in more info on Cree? Add it to your watchlist.