UPDATE 2-Cree shares fall as profit, outlook miss estimates

* Net income rose 47 percent in fiscal second quarter

* Results below expectations due to lower sales in Asia

* Q3 profit, revenue outlook below Wall St estimates

* Stock falls 15.9 percent in extended trade (Adds analyst comment, CEO quote, third-quarter outlook, updates share movement)

LOS ANGELES, Jan 18 (Reuters) - LED lighting maker Cree Inc (CREE.O) reported a 47 percent rise in quarterly profit, but its sales, profit and current quarter outlook fell short of expectations because of lower sales in Asia, sending its shares down nearly 16 percent in after-hours trading.

Net income in the fiscal second quarter was $49.8 million, or 45 cents per share, below the company's forecast calling for earnings per share of 46 cents to 50 cents. A year ago, the company earned $33.8 million, or 32 cents per share.

"Demand isn't fantastic right now in the marketplace and things have softened a little bit," said Canaccord Genuity analyst Jed Dorsheimer, who blamed an increase in manufacturing capacity throughout the LED industry for the rise in inventories.

Dorsheimer said a new LED subsidy in China "will absorb and then tighten the market again as we go through the middle of 2011."

Excluding one-time items, Cree earned 55 cents per share. On that basis, analysts had been expecting a profit of 58 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 29 percent to $257 million from $199.5 million last year. The company had been expecting revenue of $270 million to $280 million. Analysts had been expecting $276.59 million, according to Thomson Reuters I/B/E/S.

For its third quarter, Durham, North Carolina-based Cree said revenue would be similar to the second quarter, between $245 million and $265 million. Analysts had been expecting $288.3 million.

Earnings before items are expected to be between 38 cents per share and 45 cents per share in the fiscal third quarter. Analysts had been expecting earnings of 58 cents a share, according to Thomson Reuters I/B/E/S.

The company said operating expenses will increase by about $7 million due to spending on new product development.

"We are managing through an inventory correction in Asia in the near term, but the opportunity in LED lighting has not changed," Cree Chief Executive Chuck Swoboda said in a statement.

Cree shares fell almost 16 percent to $52.75 in extended trade after closing at $62.71 on Nasdaq. The stock has lost more than 20 percent of its value since hitting a year high of $83.38 in April. (Reporting by Nichola Groom. Editing by Carol Bishopric and Tim Dobbyn)