Shares in Cree (Nasdaq: CREE) tumbled 7 percent within moments of the company’s earnings report on Tuesday that missed Wall Street expectations.

Cree reported revenues of $304 million for the quarter ending Dec. 25. The consensus of analysts according to was $310 million.

Earnings were 25 cents, a penny under estimates.

The gross operating margin, meanwhile, dipped to under 35 percent from 47 percent a year ago.

Cree also forecast a drop in revenue for the current quarter to between $290-$310 million. It expects a gross margin of between 35-36 percent.

Analysts expected better revenues at $321 million with a profit of 30 cents, according to Forbes.

Shares in Cree immediately fell $1.58 to $21.75 in after-hours trading, erasing a 40-cent plus gain before trading officially ended at 4 p.m.

Cree’s stock has been hammered over the past year with over supply of light emitting diodes creating price pressures and cutting profit margins. Its 52-week high was $31.34; the low was $20.25 on Dec. 21.

Revenues were up 18 percent from a year ago and 13 percent from the preceding quarter, Cree said. However, profits plunged 53 percent from a year earlier to $28.7 million or 25 cents a share.

The second fiscal quarter financial report included data from Ruud Lightning for the entire quarter. The firm was acquired during the first fiscal quarter.

Despite the revenue and profit misses, Cree Chairman and Chief Executive Officer Chuck Swoboda was upbeat.

“Our second quarter results demonstrated the strength in our expanded lighting product line with strong growth in sales of both indoor and outdoor products,” Swoboda said in a statement.

“While the business environment remains challenging, our results demonstrate that our strategy is working,” he added. “Our future business outlook remains very optimistic based on our belief that innovation drives payback, payback drives LED lighting adoption and adoption expands the market for both Cree and our customers.”

Read the financial report here.

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