DOW JONES NEWSWIRES

Cree Inc.'s (CREE) fiscal second-quarter net income jumped 62% on strong sales of light-emitting diode products.

Shares rose 4.6% to $17.25 in after-hours trading as the results beat the company's forecast.

Many chip makers have predicted large drops in sales as the market for computers and other consumer electronics soured amid a sharp drop in discretionary spending last fall.

Chief Executive Chuck Swoboda said results in the latest quarter were driven by strong LED product sales for lighting applications.

He predicted that lower demand for products in consumer, mobile and automotive applications in the fiscal third quarter will be partially offset by growth in LED sales for commercial lighting applications.

For the quarter ended Dec. 28, the maker of semiconductors used in LED lighting, power and communications products reported net income of $10.7 million, or 12 cents a share, up from $6.62 million, or 8 cents a share, a year earlier.

The latest results included a gain of about 5 cents a share related to the patent licensing fees and a franchise tax benefit, which wasn't factored into previous guidance. Excluding stock-based compensation and acquisition-related costs, earnings rose to 20 cents a share from 14 cents.

Revenue climbed 24% to $147.6 million, including $5.6 million in patent licensing fees, which weren't factored into the company's guidance.

In October, Cree predicted earnings of 15 cents to 16 cents a share on revenue of $142 million to $146 million.

Gross margin rose to 38.3% from 35.1% partly on recent patent license agreements. Last month, Cree settled patent infringement litigation regarding its LED products with Bridgelux Inc., and Bridgelux agreed to pay a license fee and royalties. The company also recently reached a patent license agreement with Mitsubishi Chemical Holdings Corp (4188.TO).

Inventory declined 1.7% from June 29.

Looking ahead, Cree expects fiscal third-quarter earnings of 10 cents to 13 cents, excluding 5 cents a share in stock-based compensation and 3 cents a share in acquisition-related costs, on revenue of $128 million to $135 million. Analysts' estimates were for earnings of 9 cents a share, including stock-based compensation, on revenue of $139.4 million.

Cree's stock price has fallen 51% from its 52-week high last February.

-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975; Kathy.Shwiff@dowjones.com

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