Business is good at Cree (Nasdaq: CREE) – but not good enough going forward, says Wall Street.

Shares closed at $61.78 on Wednesday, down 16.8 percent from Tuesday, when the company released its fiscal first quarter earnings. While the Durham LED lighting and semiconductor manufacturer’s results beat Wall Street expectations its financial forecast failed to impress investors. The company’s stock price fell as much as 20 percent in early trading Wednesday. Throughout the day, Cree’s shares traded in the range of $59.03 and $63.35.

Two analysts cut their ratings on Cree stock in the wake of Cree’s earnings report. Research firms Needham and Stephens lowered Cree to “hold” and “underweight” from higher buy ratings.

Shares fell under $60 at one time, down $15 from the open. Cree suffered a similar sell-off after its last quarterly report.

Fiscal first quarter revenue came in at $391 million. Analysts had expected $377 million.

Earnings after one-time and other exceptions totaled 39 cents per share. The Street had projected 32 cents.

However, Cree’s revenue forecast for the current quarter of $400 million to $420 million and earnings of between 36-51 cents as well as its expected gross margin of 38.5 percent did not satisfy investors. They had been expecting higher numbers.

Financial website SeekingAlpha said consensus expectations were  $414.3 million and 44 cents and a margin slightly under a forecast of 39 percent.

As a result, Cree shares dropped some 14 percent in after-hours trading from the Tuesday close of $74.32.

“Fiscal 2014 is off to a good start, as we delivered solid Q1 revenue and earnings growth in line with our targets,” said Chuck Swoboda, Cree’s chairman and CEO.

“The strong performance was primarily due to increased sales of our lighting products, higher gross margins and improved operating leverage across the business.”

([Later in a conference call with analysts, Swoboda said Cree’s new LED bulbs were building brand and driving conversation about LED lighting.]

Cree’s revenues also are expected to grow, said Swoboda in the earnings announcement, which came just after the markets closed.

“Based on our backlog, current sales activity and project forecasts, we are targeting growth in all product segments in Q2, led by growth in LED fixtures and the Cree LED Bulb,” he said. “Even with our success, LED lighting remains a largely untapped opportunity and we remain focused on investing in new products, new channels and building the Cree brand to grow our company and lead the market.”

Revenues were up 24 percent from a year ago.

Earnings were up 49 percent.

The entire earnings report can be read online. 

[CREE ARCHIVE: Check out more than a decade of Cree stories as reported in WRALTechWire.]