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Banc of America Slashes Cree Estimates, Target

Banc of America cut its guidance, estimate and price target on Cree (CREE).

Analyst Alex Gauna believes LED segment pressures, which make up more than 50% of Cree's revenues, are the primary cause of the shortfall -- with Asia in particular impacting the outlook. He thinks competitive pricing pressures may continue near term as economic conditions slow and as capacity ramps.

He cut his $57 million Q4 revenue estimate to $45 million, and cut the $0.20 EPS to $0.14. Guana also reduced his $265.5 million fiscal 2002 (June) revenues to $185 million and trimmed the $0.87 EPS to $0.60.

Additionally, he cut the $80 target to $25. However, he reiterates his buy rating; says Cree continues to be a solid long-term growth story, driven by LEDs moving into new applications and platforms and the emergence of other power opportunities.

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