Aug. 18 (Bloomberg) -- Cree Inc., a maker of energy-efficient lighting, sank after saying its purchase of Ruud Lighting Inc. will reduce profit margins in the current quarter.
Cree fell $3.40, or 9.8 percent, to $31.34 at 9:31 a.m. in Nasdaq Stock Market trading. At the close of regular trading yesterday, Durham, North Carolina-based Cree had dropped 55 percent this year.
Cree bought Ruud for about $525 million in cash and stock and expects Ruud’s results to “slightly” dilute its fiscal 2012 net income, the company said yesterday in a statement.
The combination will give Cree access to a larger market for light-emitting diodes, which many municipalities are adopting for streetlights to reduce power consumption in the $17.3 billion U.S. lighting industry.
Ruud, a customer of Cree’s LED components, will help its new owner expand sales of both lighting products and the parts that go into them, Cree’s Chief Executive Officer Chuck Swoboda said today on a conference call.
“If we drive adoption faster, it will help increase demand for both our lighting products and our components,” Swoboda said. “By changing the lighting industry to LED, we become the market leader.”
Gross margin for the combined company will be 37 percent to 38 percent of sales for the fiscal first quarter ending in September, compared with prior guidance of 38 percent to 39 percent.
Closely held Ruud’s results will be combined with Cree’s and revenue for the first quarter will be in the range of $265 million to $275 million, up from the company’s Aug. 9 guidance of $245 million to $255 million. Ruud will continue to be based in Racine, Wisconsin, and operate as a subsidiary of Cree.
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