ARM Holdings plc
) have entered into a contract for jointly creating an embedded
software development toolkit, Development Studio 5 (DS-5). The
latest toolkit, which has a facility of FPGA-adaptive debug
system, is designed particularly for Altera SoC tools.
The ARM DS-5 Altera Edition toolkit has been introduced
particularly for eliminating any kind of debugging difficulty and
enhancing the visibility of debugging process within integrated
dual-core CPU subsystem and FPGA processes. The kit will be added
to the company's Altera SoC Embedded Design Suite profile.
The latest kit is expected to offer a unique integration
platform for Altera 28 nm Cyclone V, Arria V SoC tools and Altera
20 nm SoC devices. Altera and ARM have developed this toolkit in
order to enhance the efficacy of its clients through easy
integration of CPU as well as FPGA debugging.
Management was highly enthusiastic regarding its venture with
ARM. Now, with the introduction of this toolkit, the software
engineers can easily access a highly developed debugging tool for
augmenting the productivity of SoC devices.
Earlier, Altera reported a net income of 49 cents per share in
the third quarter of 2012, easily beating the Zacks Consensus
Estimate of 46 cents per share. However, the reported net income
compares unfavorably with 50 cents per diluted share in the
second quarter of 2012 and 57 cents per share in the third
quarter of 2011. The company has posted sales of $495.0 million
in the third quarter of 2012, down 5% year over year but up 6%
Recently, the company trimmed its revenue guidance for fourth
quarter 2012 and updated its financial guidance for 2013. Altera
now expects revenue to be 8% to 10% lower than the third-quarter
levels, compared to the previous guidance of down 6% to 10%. The
solid growth in new products will be more than offset by lower
sales of the company's existing products.
Meanwhile, for 2013, gross margin is targeted around 69% -
70%. Research and development expense is estimated at
approximately $104 million, driven by increased variable
compensation expense and stock-based compensation. SG&A is
likely to come around $315 million on the back of variable
compensation for bonus, sales commission and stock-based
In a different story, the company's prime rival,
), seems to have gained traction and has won back its lost market
share over the past few months. This does not bode well for
Altera in the coming quarters.
The current Zacks Consensus Estimates for Altera are 39 cents
and $1.73 for the fourth quarter of 2012 and for the full year of
2012, respectively. The estimates represent year-over-year growth
of (13.0%) for the fourth quarter of 2012 and (26.3%) for
As the macroeconomic conditions continue to be challenging, we
prefer to have a Zacks #4 Rank on the stock, which translates
into a short-term rating of 'Sell'. In the long run, we have an
'Underperform' recommendation on the stock.
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