Cree: Bright future for LCD lighting

Shares of Recommended List selection Cree (CREE) got a nice boost after the LED lighting company introduced its XSP Series LED Street Light.

The new street lights use nearly 50% less energy and were designed to last more than three times longer than high-pressure sodium street lighting.

More importantly, when bought in volume, the new lights will cost around $200 per light, which, when maintenance and energy costs are included, will be on par with the high-pressure sodium street lights.

The traditional street lights only cost $10 a bulb, but it costs about $200 to install them, former Anchorage, Alaska, street-light official Michael Barber told The Wall Street Journal.

The new Cree lights use half the number of LEDs compared to older models, but produce double the amount of light as measured in lumens for the same price. Cree ascribed the better performance to improvements in its proprietary silicon carbide technology.
"Everybody knew that the time will come, and it looks like that time has come," Nadarajah Narendran, director of the Lighting Research Center at Rensselaer Polytechnic Institute in New York told the Journal. "That will further accelerate market adoption for LED street lights."

Reaching the point where the overall cost to install LEDs is nearly on par with traditional lighting is a major milestone.

Steet lights, while only making up about 1% of U.S. electricity use, are still a very big market. It is this type of inflection point that should really start to drive LED adoption.

While the latest announcement is only for street lights, we would expect the industry to start to see similar inflection points for other applications in the years ahead as LED prices continue to come down.

Overall, we believe the LED lighting industry is in the very early innings of what is likely be a 10-15 year secular growth story.

Cree, meanwhile, is the clear price and technological leader in the LED lighting space at this time, as evidenced by this recent announcement, and it is the best-positioned company to benefit from this upcoming secular trend.

While the company is still likely experiencing some of the after-effects of the LED industry glut, which could show up in its Q1 earnings report, we continue to think Cree's long-term prospects remain very bright.




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