AVR-Chat

I'm doing a simple routine here.

Output goes high
output goes low for 5 ms 
output goes back to high.


Problem is that when I scope the signal it is not low for exactly 5ms.


It's 1.925 or 1.426 or 1.003ms  (approximate times)(always less than 5 ms)


Details:
ATMeg16
JTAG interface to AVR Studio 4.18
GCC coded
delay.h


I've read about this and verified that I am good with the following:

1.  I am optimized correctly in the makefile
        CPFLAGS	= -g -Os -Wall -Wstrict-prototypes-I$(AVRLIB)               -Wa,-ahlms=$(<:.c=.lst)





2.  F_CPU is set correctly
#define F_CPU          7372800

3.  Fuse Settings are set correctly (External Crystal/ Res; High Freq)
				Stertup Time 16K CK+64ms

4.  All interrupts are disabled

// disable interrupts
	cli();



Any other ideas?

Many thanks guys!