Exhibit 99.1

For Immediate Release Press Release

Contact:	Raiford Garrabrant
	Cree, Inc.
	Director, Investor Relations
	Ph: 919-287-7895
	Fax: 919-313-5615
	Email: investorrelations@cree.com

Cree Reports Financial Results for the Second Quarter of

Fiscal Year 2011

DURHAM, N.C., January 18, 2011 – Cree, Inc. (Nasdaq: CREE), a market leader in LED lighting, today announced revenue of $257.0 million for its second quarter of fiscal 2011, ended December 26, 2010.  This represents a 29% increase compared to revenue of $199.5 million reported for the second fiscal quarter last year and a 4% decrease compared to the first quarter of fiscal 2011.  GAAP net income for the second quarter increased 47% year-over-year to $49.8 million, or $0.45 per diluted share, compared to GAAP net income of $33.8 million, or $0.32 per diluted share, for the second quarter of fiscal 2010.  On a non-GAAP basis, net income for the second quarter of fiscal 2011 increased 51% year-over-year to $60.7 million, or $0.55 per diluted share, compared to non-GAAP net income for the second quarter of fiscal 2010 of $40.2 million, or $0.38 per diluted share.

“Q2 results reflected continued growth in our LED lighting product line, but revenue and earnings were lower than our targets due primarily to lower sales to our LED component distributors in Asia,” stated Chuck Swoboda, Cree chairman and CEO.  “We are managing through an inventory correction in Asia in the near term, but the opportunity in LED lighting has not changed.  Quarterly revenue increased 29% year over year and based on the market trends we are seeing and the success of our own LED lighting business, we are more confident that we will see continued adoption of LED lighting over the next several years.” 

Q2 2011 Financial Metrics:

		Second Quarter (in thousands, except per share amounts and percentages)
		2011	2010	Change
	Net revenue	$256,983	$199,475	$57,508	29%
GAAP
	Gross Margin	47.1%	47.2%
	Operating Margin	21.6%	23.1%
	Net Income	$49,775	$33,786	$15,989	47%
	Earnings per diluted share	$    0.45	$    0.32	$    0.13	41%
Non-GAAP
	Gross Margin	47.7%	47.5%
	Operating Margin	26.5%	27.6%
	Net Income	$60,720	$40,202	$20,518	51%
	Earnings per diluted share	$    0.55	$    0.38	$    0.17	45%

»   Cash and investments increased $12.0 million from Q1 of fiscal 2011 to $1,110.8 million.

»   Cash flow from operations was $57.2 million.  Free cash flow (cash flow from operations less capital expenditures) was ($7.5) million as we spent $64.7 million on capital expenditures.

»   Accounts receivable (net) increased $12.1 million from Q1 of fiscal 2011 to $135.1 million, resulting in days sales outstanding of 47, an increase of 6 days from Q1 of fiscal 2011.

»   Inventory increased $19.6 million from Q1 of fiscal 2011 to $145.5 million and represents 96 days of inventory, an increase of 14 days from Q1 of fiscal 2011.

»   Effective tax rate for Q2 was 13.7% primarily due to the benefit from an extension of the R&D tax credit.

 

Recent Business Highlights:

»   Announced that Denny’s Corporation has chosen energy-efficient LED lights from Cree as the preferred lighting standard for all its new and remodeled stores across the United States.

»   Shattered LED industry performance standards with the release of the Cree XLamp® XM-L LED.

»   Introduced the LED industry’s first lighting-class LED array, the Cree XLamp CXA20, to accelerate indoor LED lighting.

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»   Released the XLamp XP-E High Efficiency White (HEW), the first high-power LEDs featuring Cree’s new Direct AttachTM LED technology.

Business Outlook:

For its third quarter of fiscal 2011 ending March 27, 2011, Cree targets revenue in a similar range as the second quarter at $245 million to $265 million due to seasonality and the on-going inventory correction in Asia.  Q3 GAAP and non-GAAP gross margin is targeted at 46% +/-.    GAAP operating expenses are targeted to increase by approximately $7 million to $73 million, or $62 million on a non-GAAP basis, due to increased spending to support new product development, 150mm qualification and additional sales and application resources.  The tax rate is targeted at 21% for fiscal Q3.  GAAP net income is targeted at $32 million to $40 million, or $0.29 to $0.36 per diluted share.  Non-GAAP net income is targeted in a range of $42 million to $50 million, or $0.38 to $0.45 per diluted share, based on an estimated 110.6 million diluted weighted average shares.  Targeted non-GAAP earnings exclude expenses related to the amortization of acquired intangibles of $0.02 per diluted share, and stock-based compensation expense of $0.07 per diluted share.

Quarterly Conference Call:

Cree will host a conference call at 5:00 p.m. Eastern time today to review the highlights of the fiscal second quarter 2011 results and the fiscal third quarter 2011 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 — Financial Events and Presentations” for webcast details. The call will be archived and available on the website through March 1st, 2011.

Supplemental financial information, including the non-GAAP reconciliation attached to this press release, is available in the “Investor Relations” section of Cree’s website, under “Financial Information”, “Quarterly Results”, at www.cree.com.

About Cree, Inc.

Cree is leading the LED lighting revolution and making energy-wasting traditional lighting technologies obsolete through the use of energy-efficient, environmentally friendly LED lighting. Cree is a market-leading innovator of lighting-class LEDs, LED lighting, and semiconductor solutions for wireless and power applications.

Cree’s product families include LED fixtures and bulbs, blue and green LED chips, high-brightness LEDs, lighting-class power LEDs, power-switching devices and radio-frequency/wireless devices. Cree solutions are driving improvements in applications such as general illumination, electronic signs and signals, variable-speed motors and wireless systems.

For additional product and company information, please refer to www.cree.com.

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Non-GAAP Financial Measures:

This press release highlights the company’s financial results on both a GAAP and a non-GAAP basis.  The GAAP results include certain costs, charges and expenses which are excluded from non-GAAP results.  By publishing the non-GAAP measures, management intends to provide investors with additional information to further analyze the company's performance, core results and underlying trends.  Cree’s management evaluates results and makes operating decisions using both GAAP and non-GAAP measures included in this press release.  Non-GAAP results are not prepared in accordance with GAAP and non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP.  Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures attached to this press release.

Forward Looking Statements:

The schedules attached to this release are an integral part of the release. This press release contains forward-looking statements involving risks and uncertainties, both known and unknown, that may cause actual results to differ materially from those indicated. Actual results, including with respect to our targets and prospects, could differ materially due to a number of factors, including risks associated with the ramp-up of production of our new products, as well as production at our new Huizhou facility; the risk that, due to the complexity of our manufacturing processes, we may experience production delays that preclude us from shipping sufficient quantities to meet customer orders or that result in higher production costs and lower margins; the risk that our distributors are not able to accurately anticipate demand from their end customers, which can result in increased inventory and reduced orders; ongoing uncertainty in global economic conditions that could negatively affect product demand, collectability of receivables and other related matters as consumers and businesses may defer purchases or payments, or default on payments, in response to tight credit and negative financial news; our ability to complete development and commercialization of products under development, such as our pipeline of brighter LED chips, LED components and LED lighting products; our ability to lower costs; increasing price competition in key markets; risks resulting from the concentration of our business among few customers, including the risk that customers may reduce or cancel orders or fail to honor purchase commitments; the rapid development of new technology and competing products that may impair demand or render our products obsolete; the potential lack of customer acceptance for our products; risks associated with ongoing litigation; and other factors discussed in our filings with the Securities and Exchange Commission (SEC), including our report on Form 10-K for the fiscal year ended June 27, 2010, and subsequent reports filed with the SEC. Except as required under the U.S. federal securities laws and the rules and regulations of the SEC, Cree disclaims any obligation to update any forward-looking statements after the date of this release, whether as a result of new information, future events, developments, changes in assumptions or otherwise.

Cree, the Cree logo, and XLamp are registered trademarks, and Direct Attach is a trademark, of Cree, Inc.

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CREE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
	Three Months Ended						Six Months Ended
	December 26,			December 27,			December 26,			December 27,
	2010			2009			2010			2009
	(Unaudited)						(Unaudited)
Revenue, net	$	256,983		$	199,475		$	525,420		$	368,605
Cost of revenue, net		135,837			105,405			273,745			200,757
Gross profit		121,146			94,070			251,675			167,848
Gross margin percentage		47.1	%		47.2	%		47.9	%		45.5	%
Operating expenses:
Research and development		29,233			19,325			53,965			39,499
Sales, general and administrative		33,366			25,560			62,568			49,173
Amortization of acquisition related intangibles		2,706			3,045			5,412			6,090
Loss on disposal or impairment of long-lived assets		429			110			901			403
Total operating expenses		65,734			48,040			122,846			95,165
Operating income		55,412			46,030			128,829			72,683
Operating income percentage		21.6	%		23.1	%		24.5	%		19.7	%
Non-operating income:
Interest and other non-operating income, net		2,233			2,001			4,187			3,631
Income from operations before income taxes		57,645			47,991			133,016			76,405
Income tax expense		7,870			14,205			25,205			21,593
Income from continuing operations	$	49,775		$	33,786		$	107,811		$	54,812
Net income	$	49,775		$	33,786		$	107,811		$	54,812
Diluted earnings per share:
Net income	$	0.45		$	0.32		$	0.98		$	0.55
Weighted average shares of common
stock outstanding, diluted		109,976			106,607			109,817			99,836

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CREE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
	December 26,		June 27,
	2010		2010
	(Unaudited)
Assets:
Current assets:
Cash, cash equivalents and short term investments	$	1,110,828	$	1,066,405
Accounts receivable, net		135,132		117,535
Inventories		145,517		112,241
Income taxes receivable		3,645		-
Deferred income taxes		19,435		18,823
Prepaid expenses and other current assets		38,671		40,159
Total current assets		1,453,228		1,355,163
Property and equipment, net		495,928		419,726
Intangible assets, net		103,621		106,109
Goodwill		326,178		313,019
Other assets		4,656		5,159
Total assets	$	2,383,611	$	2,199,176
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable, trade	$	80,595	$	63,826
Accrued salaries and wages		19,760		26,247
Income taxes payable		-		14,375
Other current liabilities		21,414		15,643
Contingent payment due related to LLF acquisition		13,159		-
Total current liabilities		134,928		120,091
Long-term liabilities:
Deferred income taxes		39,398		39,398
Other long-term liabilities		20,469		11,639
Total long-term liabilities		59,867		51,037
Shareholders' Equity:
Common stock		136		135
Additional paid-in-capital		1,561,402		1,507,435
Accumulated other comprehensive income, net of taxes		11,160		12,171
Retained earnings		616,118		508,307
Total shareholders' equity		2,188,816		2,028,048
Total liabilities and shareholders' equity	$	2,383,611	$	2,199,176

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Cree, Inc.

Non-GAAP Measures of Financial Performance

To supplement the company’s consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP, Cree uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP gross margin, non-GAAP operating expenses and free cash flow.

Reconciliation to the nearest GAAP measure of all historical non-GAAP measures included in this press release can be found in the tables included with this press release.  In this press release, Cree also presents its target for non-GAAP operating expenses, which is operating expenses less stock-based compensation expense and charges for amortization or impairment of acquired intangibles.

Non-GAAP measures presented in this press release are not in accordance with or an alternative to measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cree’s results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate Cree’s results of operations in conjunction with the corresponding GAAP measures.

Cree believes that these non-GAAP measures, when shown in conjunction with the corresponding GAAP measures,  enhance investors’ and management’s overall understanding of the company’s current financial performance and the company’s prospects for the future, including cash flows available to pursue opportunities to enhance shareholder value. In addition, because Cree has historically reported certain non-GAAP results to investors, the company believes the inclusion of non-GAAP measures provides consistency in the company’s financial reporting.

For its internal budgeting process, and as discussed further below, Cree’s management uses financial statements that do not include stock-based compensation expense or amortization or impairment of acquired intangible assets, and the income taxes associated with the foregoing. Cree’s management also uses non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the company’s financial results.

As described above, Cree excludes the following items from one or more of its non-GAAP measures when applicable:

Stock-based compensation expense.This expense consists of expenses for stock options, restricted stock and employee stock purchasesthrough its ESPP. Cree excludes stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that Cree does not believe are reflective of ongoing operating results.

Amortization or impairment of acquired intangible assets. Cree incurs amortization or impairments of acquired intangible assets in connection with acquisitions. Cree excludes these items because they arise from Cree’s prior acquisitions and have no direct correlation to the current operating results of Cree’s business.

Income tax effects of the foregoing non-GAAP items.  This amount is used to present each of the amounts described above on an after-tax basis consistent with the presentation of non-GAAP net income.

Cree expects to incur stock-based compensation expense and amortization of acquired intangible assets in future periods, including income taxes associated with all of the foregoing.

In addition to the non-GAAP measures discussed above, Cree also uses free cash flow as a measure of operating performance. Free cash flow represents operating cash flows less net purchases of property and equipment. Cree considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of property and equipment, which can then be used to, among other things, invest in Cree’s business, make strategic acquisitions, strengthen the balance sheet and repurchase stock. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the company’s cash balance for the period.

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CREE, INC.
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, except per share amounts)
(Unaudited)
	Three Months Ended						Six Months Ended
	December 26, 2010			December 27, 2009			December 26, 2010			December 27, 2009
GAAP Gross Profit	$	121,146		$	94,070		$	251,675		$	167,848
GAAP Gross Margin		47.1	%		47.2	%		47.9	%		45.5	%
Adjustment:
Stock-based compensation expense		1,351			729			2,483			1,554
Non-GAAP Gross Profit	$	122,497		$	94,799		$	254,158		$	169,402
Non-GAAP Gross Margin		47.7	%		47.5	%		48.4	%		46.0	%
	Three Months Ended						Six Months Ended
	December 26, 2010			December 27, 2009			December 26,  2010			December 27,  2009
GAAP operating income	$	55,412		$	46,030		$	128,829		$	72,683
GAAP operating income percentage		21.6	%		23.1	%		24.5	%		19.7	%
Adjustments:
Stock-based compensation expense		9,977			6,069			17,981			11,681
Amortization of acquisition-related intangible assets		2,706			3,045			5,412			6,090
Total adjustments to GAAP operating income		12,683			9,114			23,393			17,771
Non-GAAP operating income		68,095			55,144			152,222			90,454
Non-GAAP operating income percentage		26.5	%		27.6	%		29.0	%		24.5	%
	Three Months Ended						Six Months Ended
	December 26, 2010			December 27, 2009			December 26, 2010			December 27, 2009
GAAP net income	$	49,775		$	33,786		$	107,811		$	54,812
Adjustments:
Stock-based compensation expense		9,977			6,069			17,981			11,681
Amortization of acquisition-related intangible assets		2,706			3,045			5,412			6,090
Total adjustments to GAAP income before provision
for income taxes		12,683			9,114			23,393			17,771
Income tax effect		(1,738	)		(2,698	)		(4,421	)		(5,022	)
Non-GAAP net income		60,720			40,202			126,783			67,561
Diluted net income per share:
GAAP net income	$	0.45		$	0.32		$	0.98		$	0.55
Non-GAAP	$	0.55		$	0.38		$	1.15		$	0.68
Shares used in diluted net income per share calculation:
GAAP net income		109,976			106,607			109,817			99,836
Non-GAAP		109,976			106,607			109,817			99,836
	Three Months Ended						Six Months Ended
	December 26, 2010			December 27, 2009			December 26, 2010			December 27,  2009
Free Cash Flows
Cash flow from operations	$	57,237		$	21,511		$	145,755		$	82,699
Less:  PP&E CapEx spending		64,738			41,437			126,387			61,826
Total Free Cash Flows	$	(7,501	)	$	(19,926	)	$	19,368		$	20,873

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CREE, INC.
Additional Financial Information
(in thousands)
(Unaudited)
	Three Months Ended				Six Months Ended
	December 26,  2010		December 27, 2009		December 26, 2010		December 27, 2009
Stock-Based Compensation Expense
Cost of sales	$	1,351	$	729	$	2,483	$	1,554
Research and development		2,183		1,388		3,998		2,652
Sales, general and administrative		6,443		3,952		11,500		7,475
Total stock-based compensation in operating expense		8,626		5,340		15,498		10,127
Total Stock-Based Compensation Expense	$	9,977	$	6,069	$	17,981	$	11,681
	December 26, 2010		June 27, 2010
Cash, Cash Equivalents and Investments
Cash and cash equivalents	$	465,557	$	397,431
Short term investments		645,271		668,974
Total Cash, Cash Equivalents and Investments	$	1,110,828	$	1,066,405

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