CED in the News, 2003
Reprinted with permission from LocalTechWire
Confident in Cree's Future, Founder Turns Attention to Building Homes
By Matthew Burns, Special To LTW
Editor's note: Neal Hunter, who will deliver the keynote address at the Council for Entrepreneurial Development's Money & Markets event on Feb. 7, was named Ernst & Young's national Entrepreneur of the Year for 2002. Hunter, one of the founders of Cree, recently spoke with Local Tech Wire about his career, his new goals, and life at Cree.
DURHAM - Neal Hunter has built his company. Now he wants to build his home.
The chairman of semiconductor maker Cree is spending a lot of time these days trying to develop a 700-acre luxury subdivision stretching from southern Durham County to Jordan Lake in neighboring Chatham County.
"I wanted to find a piece of property that meant a lot to me for my personal home, and I kept collecting property to guard that piece and ended up with a sizable piece of acreage," Hunter says of the development, which will be called Colvard Farms. "It's all surrounded by Army Corps of Engineers (watershed) land, so it's all very protected, very peaceful."
In addition to tackling the home building business, he still finds time to make it into the office almost every day to keep tabs on the company he founded 15 years ago with his brother and four others. After handing off daily oversight of Cree in 2001 to President and Chief Executive Chuck Swoboda, Hunter says he now focuses on strategic projects and working with major customers.
"You have to force yourself out of the day to day," he says. "It's easier when you have friends you respect taking over and you still have communication and contact with what's going on."
Cree has had a lot going on over the years, transforming a platform of silicon carbide into an array of products ranging from radio-frequency chips used in wireless communications to light-emitting diodes for various applications to blue lasers used in DVDs and other storage devices - even artificial gemstones. Hunter says that diversity has been critical in carrying the company through cycles of the technology sector.
Laser, LEDs promising
For example, the continued softness in the telecommunications market has hampered sales of Cree's RF chips in recent quarters and resulted in a $68 million write-off in 2002 at a division that makes those products. But LEDs continue to be incorporated into new devices, such as traffic signals, advertising displays and military systems to detect anthrax and other biological agents.
"We're kind of a different animal because our market penetration in any one area isn't usually high, but we operate in so many different markets," he says. "I continue to be astounded by LED demand, the ability to replace traditional lighting with solid-state lighting. We often take it for granted how large the opportunity is in that market."
LEDs and the blue laser are the two product areas where Hunter sees the most potential for Cree. About 70 percent of the company's revenue comes from products introduced over the past year, which include a slew of LEDs and as well as longer-lasting lasers, he says.
Industry groups now are drafting standards for the laser, which has a narrower beam than the red laser currently used in electronic devices, allowing four to five times more information to be packed into a CD. He expects demand to take off next year as it is incorporated into a new generation of DVDs.
LEDs have accounted for the bulk of Cree's sales over the years, and he says officials had expected them to start bringing in less than half of the company's revenue two years ago. But everyone has underestimated the devices' staying power.
"We've been through some tough times, but I think our markets are starting to roar back to life," he says. "In the technology world, we're one of a handful of companies that are actually upgrading revenue guidance going forward."
R&D pushed in downturn
Cree announced record quarterly revenue and profit to close 2002. Its second quarter fiscal 2003 revenues hit $56.7 million, up 16 percent from the previous quarter and a record for the company. Cree also had net income of $8.9 million, or 12 cents a share as compared to a $17 million for the same time period in 2002.
Continued emphasis on research and development has been key to the company's ability to grow despite the slow economy, according to Hunter. Cree raised more than $200 million in a secondary stock offering in January 2000, at the height of corporate valuations before the Internet bubble burst, and much of that money has been plowed back into R&D during the subsequent downturn.
"There's always stuff in the pipeline," he says. "That's the nature of technology. We're innovating, we're throwing off a lot of cash and, because of that, we're able to pay for a lot of R&D, which I think is giving us a little bounce ahead of the rest of industry."
Cree website: www.cree.com