In these waning days of 2011, there's a chill in the air and snow in the forecast. What better time of year to curl up by the fire and ponder: What went wrong with the stocks you picked back in January? What went right? And should you keep these stocks in your portfolio, or go out and find something new?

That's what we aim to do today, as we flip back the calendar, and consider the year that was at Cree (Nasdaq: CREE).

A few Foolish facts about Cree

Year-to-Date Stock Return (66.6%)
P/E 22.9
Dividend Yield None
1-Year Revenue Growth 13.9%
1-Year Profit Growth (3.8%)
CAPS Rating (out of 5) ***

Source: Motley Fool CAPS.

What happened to Cree this year?
Cree bulls stampeded into 2011, expecting big things from the LED lighting specialist. Over in China, the "global superpower of air pollution" was hatching plans to reinvent its lighting industry, and convert wholesale from 19th-century incandescent tech to 21st-century "green" lighting. Speculation over China's conversion to LEDs inspired investors to place bets on the likes of LED manufacturing equipment makers Veeco Instruments and Aixtron in Germany.

Here at home, General Electric (NYSE: GE) was rumored to be partnering with Cree to build a new line of LED bulbs -- then confirmed the rumor in July. And retailers like Home Depot and Wal-Mart were said to be stocking the shelves with LEDs to satisfy anticipated demand. But how did it work out?

Instead of riding a wave of LED adoption, Cree shareholders had a devil of a time in 2011 -- as illustrated by the 66.6% decline in market cap. Turned out, as the actual making of LED lighting evolved toward a "commodity" industry, lighting supplies spiked and profit margins dropped. By April, Cree was reporting a near-60% decline in earnings, and warning of more bad news to come.

What now?
So here we sit at the end of 2011, and once again, analysts are queuing up to predict better things in the new year. Will they be right this time?

Perhaps. There's no denying the energy efficiency of LEDs. What I'd like to see, though, is a bit more cash efficiency at Cree. Even if this new tech is the wave of the future, Cree shareholders won't benefit until their company starts generating some cash from the business. It failed in 2011 -- here's hoping 2012 will be better.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.