Cree announced an update to its financial guidance for the fourth quarter of fiscal 2019. The company modified its revenue forecast of fiscal 4Q19 to the range of US$245 million to 252 million from prior US$263 million to 271 million as the U.S. government put Huawei on a trade blacklist.
Cree said the update of financial guidance is in response to the decision on May 15, 2019, by the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce to add Huawei Technologies and 68 of its affiliates to the “Entity List” maintained by the U.S. Department of Commerce, and softer than originally expected demand for the company’s LED products.

According to Cree, revenue for products and materials associated with Huawei’s wireless infrastructure build-out were expected to be up to $15 million in the fourth quarter of fiscal 2019. But the company does not expect to ship more products to Huawei in the fourth quarter. Cree said it cannot predict when it will resume shipment which will be pending on further guidance from the U.S. government.
In addition to the Huawei matter, Cree also sees soft demand on LED product due to global trade uncertainties resulted by the trade dispute. As a result, the updated revenue expectation from continuing option of 4Q19 which ends on June 30, 2019, is in the range of US$245 million to 252 million, including Wolfspeed revenue between $132 million to $135 million and LED Products revenue between US$113 million to $117 million.
Adjusted non-GAAP net income from continuing operations is now between US$8 million to $13 million (prior US$12 million to $17 million) and non-GAAP diluted EPS is between US$0.08 to $0.12, in comparison to the prior US$0.12 and $0.16.