) reported earnings of 37 cents per share in the fourth quarter
of 2012, which missed the Zacks Consensus Estimate by 2 cents.
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The quarter's miss and a weak guidance resulted in a 6.2% decline
in share price in after-hours trading.
Altera reported total revenue of $439.4 million in the fourth
quarter, down 4.0% year over. The quarter's revenue came below
the Zacks Consensus Estimate of $451.0 million but was better
than management's sequential decline guidance of 6.0% - 10%. Weak
sales of mainstream and mature products outweighed strong new
Geographically, all regions posted year-over-year declines,
barring Europe, Middle East & Africa region. The revenue
improvement in Europe was mainly due to a major customer win. On
an end-market basis; automotive, broadcast, military and
networking fell double digits on a percentage basis.
Contributions from Telecom and Wireless end market and Computer
and Storage end market remained flat year over year.
Gross margin came in at 69.7%, down from 70.1% in the year-ago
quarter and slightly below management's guidance. This was
primarily due to unfavorable customer mix in the wireless and
wireline markets. Operating margin came in at 31.4%, down from
35.0% in the year-ago quarter. Total operating expenses grew 1.3%
year over year, reflecting modest cost reduction initiatives.
Reported net income was $120.8 million or 37 cents per share
compared with $146.6 million or 45 cents per share in the fourth
quarter of 2011.
Balance Sheet & Cash Flow
Altera exited the quarter with a cash and short-term investment
balance of $3.02 billion and operating cash of $126.7 million.
Capital expenditure was $7.2 million.
Altera repurchased 1.6 million shares in the quarter for $50.0
million. The company also declared a quarterly dividend of 10
cents per share, which will be paid on Mar 1 to stockholders of
record as of Feb 11.
Altera expects sales to be down 4% - 8% sequentially in the first
quarter of 2013, primarily due to continuous weak performances
across end markets and a Vendor Managed Inventory (VMI)
arrangement signed with one of the customers. Under this
arrangement, Altera could only replenish the customer's stock
after its exhaustion. The procedure, though beneficial for both
the parties, will delay revenue recognition.
Altera continues to see traction in the 28-nanometer as well as
Management projects gross margin of 69% - 70% in the first
quarter, roughly in line with the fourth quarter.
Altera has delivered disappointing fourth quarter 2013 results
with EPS and revenue missing the Zacks Consensus Estimates.
Broad-based revenue weaknesses were noticed across the end
markets and geographical regions. Guidance was disappointing. The
only positive was strong sales of new products, which however
will be not enough to give the fundamentals a boost in the near
Last week, Altera's archrival
) reported modest results for the third quarter of fiscal 2013
and provided a better guidance for the fourth quarter citing
higher revenues from all geographic regions and better demand
situation for its 28NM node products.
Currently, Altera holds a Zacks Rank #5 (Strong Sell). Not all
semiconductor stocks are performing as poorly as Altera. We
), which have a Zacks Rank #1 (Strong Buy).