Image source: Getty Images.

What: Shares of LED maker Cree, Inc. (NASDAQ:CREE) fell as much as 16.3% in trading Wednesday after the company reported fiscal-fourth-quarter results. At 11:50 a.m. EDT shares were still down 14.4% on the day.

So what: Quarterly revenue rose 2% to $382 million, and net loss fell 88% to $10.6 million, or $0.11 per share. Adjusted earnings, which pull out one-time items, were $0.19 per share, a penny below analyst expectations.  

What really disappointed investors was the revenue from discontinued operations guidance of $310 million to $330 million with non-GAAP net income from continuing operations expected to be $0.06 to $0.11 per share. Analysts were expecting revenue of $398 million and earnings of $0.22 per share, which is where the disappointment comes in.  

Now what: The growing LED business is hard to gauge from an investment perspective because falling costs can offset volume growth and prices can change rapidly. I suggest long-term investors watch for the volume changes and gross margins going forward. That'll tell if product is in demand from customers, which will eventually lead to growing profitability.

The fiscal-fourth-quarter report isn't something to be excited about, that's for sure, but in a volatile business, I wouldn't be worried about one earnings miss, either.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.