DURHAM – Cree executives told Wall Street analysts Tuesday that the semiconductor, power product and LED lighting firm is launching a plan to “right size” its Lighting Products group.

One of three product operations within Cree (the others being LEDs and its Wolfspeed power components), the Lighting Products operation has been struggling. Cree said in its earnings report released after the markets closed Tuesday that the company took a loss of $241 million for the quarter after it took a $247.5 million charge for its lighting division. Cree shares jumped 7 percent after its financials exceeded Wall Street expectations for the previous and coming quarters. But some changes are coming as Cree also seeks to adjust to the trade dispute between China and the US which is impacting Cree’s business at Wolfspeed and also could hit LEDs.

A Cree street light

Later in the conference call, Chief Financial Officer Mike McDevitt disclosed the coming changes, a “right size” plan normally indicating job layoffs or other cuts.

“During Q4 [the current quarter] we are implementing a plan to right size our Lighting Products resources to align with our business strategy,” McDevitt warned.

“We target incurring a $7 million plus or minus GAAP [generally accepted accounting principles] restructuring charge as part of this effort that will be excluded from our non-GAAP targets. The restructuring plan is aimed to be fully implemented before the end of the September 2018 quarter after which we target fully realizing $15 million in annual operating expense reductions.”

CEO Greg Lowe, who recently set Cree on the path of a new strategic plan in which Wolfspeed is envision as growing from Cree’s smallest to largest revenue provider, said the reorganization is part of a plan “to fix the business.”

“[T]he single objective coming out of the strategic review process was to fix the business,” Lowe told analysts.

“We’ve made significant changes to our design and product release methodologies resulting in great initial revenue traction on new products and lower warranty claims. We’ve also improved relationships with our channel and distribution partners giving us a larger footprint and a better customer facing presence.”

Lowe said he has seen progress but wants more.

“In Q3 the hard work of the past year has started to pay off and while it’s still early, it feels like the business is turning the corner,” he said, according to a transcript of the conference call provided by business news website SeekingAlpha.

“Gross margins improved more than 300 basis points quarter-over-quarter and we target higher revenue and additional margin improvement in Q4. This is being driven by a combination of factors; continued improvements in quality, better channel engagements, and increasing demand for our new products.”

The full transcript can be read online.