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Surprise CFO Resignation at Cree

Cynthia Merrell cited "changes in the public corporate environment in recent years" as a reason behind her departure from a job she's held since 1998.
Stephen TaubAugust 12, 2005

Semiconductor manufacturer Cree Inc. announced that Cynthia B. Merrell has resigned as chief financial officer and treasurer.

In a statement, she cited “changes in the public corporate environment in recent years” as well as her desire to spend more time with her family. Merrell, who has held her current positions since 1998, said that “with the completion of the first assessment of our internal controls under Section 404…the company is well positioned for its next phase of growth.” Chairman and chief executive officer Chuck Swoboda added that “Cindy has been an important part of Cree’s growth and success over the last nine years and she has helped position Cree for continued success.”

However, the timing of Merrell’s surprise resignation — which will be effective when a successor takes office but not later than mid-February 2006 — “is not ideal,” Hans Mosesmann at Moors & Cabot Capital Markets told MarketWatch. The Durham, North Carolina company’s stock fell more than 13 percent on Friday following the company’s announcement that earnings met Wall Street expectations but revenue came in shy of estimates.

“In this day and age, whenever a CFO quits, it’s always considered suspicious,” Morgan Keegan analyst Harsh Kumar told the Associated Press. Cree’s earnings for the quarter met analysts’ forecasts, he noted, only after the inclusion of some unusual items. Nonetheless, Kumar told the AP, “I’m not worried about the accounting.”

Earlier this month, Cree announced that the U.S. District Court for the Middle District of North Carolina dismissed “in its entirety with prejudice” a class action complaint filed in 2003 against Cree and certain of its current and former directors and officers. The lawsuit had alleged that the defendants engaged in fraudulent business transactions designed to artificially increase Cree’s stock price, according to Reuters, citing a company spokesman.