Cree reports financial results for the first quarter of fiscal 2007: Revenue of $104 million and diluted EPS of $0.17

This represents a 1% increase over the revenue of $102.9 million reported for the year-ago period. Net income for the first quarter was $13.3 million, or $0.17 per diluted share, compared to $21.7 million or $0.28 per diluted share for the first quarter of 2006. “Q1 was a solid quarter for Cree, as we delivered earnings at the high end of our previously announced target range,” stated Chuck Swoboda, Cree chairman and CEO. “While short-term market conditions remain challenging, we continue to make outstanding progress towards our goal of enabling LEDs to become a cost-effective, energy-saving alternative for lighting applications. The recently introduced EZBright™1000 LED power chip and the latest XLamp® 7090 power LED have established a new class of performance by dramatically increasing the light output and efficiency provided by LEDs. Looking forward, we are on track with our strategy to broaden our product lines into higher-value components for the tremendous markets in lighting and power.”

Q1 Financial Highlights:
* Net income from continuing operations for the first quarter was $13.3 million, or $0.17 per diluted share.

* Gross profit was 41% of revenue.

* Operating profit was 16% of revenue.

* The company closed the acquisition of INTRINSIC Semiconductor, which was based on a purchase price of $46 million.

* The company repurchased 300,000 shares for $5.4 million, or $18.14 per share; 5.2 million shares remain authorized under the stock repurchase program that extends through June 2007.

* Cash flow from operations was $43 million.

* Cash and investments equaled $334 million.

Recent Business Highlights:
* The company closed the acquisition of INTRINSIC Semiconductor. The integration of INTRINSIC’s ZMP™ technology into Cree’s materials product line is targeted to accelerate development of larger-diameter, high-quality SiC wafers, which should enable new high-power semiconductor devices and lower-cost LEDs.

* The EZBright1000 LED power chip was released. This industry-leading chip is twice the brightness of Cree’s previous-generation power chips and should enable solid-state lamp makers to challenge the efficiency of not only incandescent but also fluorescent lamps.

* The new XLamp 7090 power LED was released. It delivers a dramatic increase in brightness and efficiency as the first power LED based on the industry-leading EZBright1000 LED power chip and was designed to enable general lighting applications, such as street lighting, retail lighting, and parking garage lighting.

* Lite-On Technology Corporation licensed Cree’s pioneering white LED patent, U.S. Patent No. 6,600,175. The license authorizes Lite-On to manufacture and sell light bars incorporating Cree white LEDs for use in backlighting LCD displays of laptops.

* The company announced it is shipping sample quantities of a new GaN HEMT optimized for North American WiMAX applications. It is designed to provide exceptional linear power and efficiency for applications operating between 2.3 GHz and 2.9 GHz.

Business Outlook:
For its second quarter of fiscal 2007, Cree currently targets revenue in a range of $105 million to $109 million with earnings of $0.14 to $0.17 per diluted share, excluding amortization of acquisition-related intangibles resulting from the acquisition of INTRINSIC Semiconductor. The final valuation of acquisition-related intangible assets is expected to be completed by December 2006.

Cree will host a conference call at 5:00 p.m. Eastern time today to review the highlights of the first quarter fiscal 2007 results and the second quarter fiscal 2007 business outlook, including significant factors and assumptions underlying the targets noted above. The conference call will be available to the public through a live audio web broadcast via the Internet. Log on to Cree’s website at www.cree.com and go to “Investor Relations — Overview” for webcast details. The call will be archived and available on the website through November 2, 2006.

Supplemental financial information is available in the “Investor Relations” section of Cree’s website, under “Financial Metrics,” “Quarter ending September 24, 2006” at http://www.cree.com/investor/metrics.htm.

About Cree, Inc.
Cree is a market-leading innovator and manufacturer of semiconductors that enhance the value of solid-state lighting, power and communications products by significantly increasing their energy performance and efficiency. Key to Cree’s market advantage is its world-class materials expertise in silicon carbide (SiC) and gallium nitride (GaN) for chips and packaged devices that can handle more power in a smaller space while producing less heat than other available technologies, materials and products.