John Kurtzweil, chief financial officer of Cree, Inc. (Nasdaq: CREE), stepped down Monday to become CFO at Extreme Networks, the company said.

The news helped trigger a big 13 percent drop in Cree shares to $25.30, down $3.79 in early trading.

Shares did rally to finish the day down 6.5 percent to $27.20.

“Investors always hate CFO transition, and this one is no exception,” Forbes noted.

The one-day decline was the largest for Cree since Dec. 19.

Analyst Jesse Pichel at the research firm Jefferies said the stock fell due to concerns that Kurtzweil’s departure could be a sign of bigger problems at the company. The CFO’s departure also could have negative implications for Cree since it is losing a competent manager who is respected by investors, Pichel added in a research note.

However, he also pointed out: ”We do not view the move as an indication of looming weakness for Cree or the LED industry,” Pichel wrote.

Pichel rates Cree stock as a “Buy” with a share target price of $35. 

Most analysts rate Cree highly with 19 listing it as a strong buy or buy; 10 rate it as a “hold;” three as “underperform” and one as “sell.”

Pichel said that Kurtzweil’s departure has negative implications for Cree because it is losing a competent manager who is well respected by investors.

Michael McDevitt will fill the role on an interim basis while Cree launches a search for a permanent replacement.

“The decision to leave Cree was a very difficult one for me as the past six years have been personally rewarding,” Kurtzweil said in a statement issued Tuesday. “At this point in my career, however, I decided to move to Extreme Networks, a smaller firm where I can have a more hands-on role in growing the business.”

Extreme Networks (Nasdaq: EXTR), which is based in California, has an operation in the Triangle.

“I believe Extreme Networks is well positioned to capitalize on network upgrades for cloud, data centers and mobile infrastructures,” said Kurtzweil in a statement. “Extreme Networks has a long record of developing high performance Ethernet products and has helped its customers manage complex networks with open and innovative technologies.”

The firm said Kurtzweil would replace Jim Judson, its interim CFO.

“John brings a perfect complement of skills and experience to the Extreme Networks team,” said Oscar Rodriguez, chief executive officer at Extreme Networks. “We are looking forward to John further transforming our company processes and systems to improve efficiency and productivity, towards our goal of improved profitability and revenue growth over time.”

Chuck Swoboda, Cree’s chairman and chief executive officer, praised Kurtzweil’s contributions and said the company is on track for growth through the first half of 2012.

“We appreciate John’s contributions in helping grow Cree from $400 million in revenues in fiscal 2007 to over a billion dollars in annualized revenues today,” Swoboda said. “He has built a strong finance team and a foundation for future growth. We wish him continued success.”

Kurtzweil was its CFO for six years and he will consult with the company through June 15.

McDevitt has been with the company since 2002 and also acted as interim CFO in 2006, before Kurtzweil was hired.

(The AP and Bloomberg contributed to this report.)