Recently, programmable logic devices maker
) reiterated its guidance for the second quarter of 2012.
The company continues to project a sequential revenue growth of
14% - 18% in the second quarter of 2012. The reiterated guidance
implies a revenue guidance of $437.5 million - $452.9 million.
Management stated that the company will post strong sequential
growth from its 40-nm and 28-nm products. Growth is projected to be
broad based across the company's vertical markets.
Earlier, Altera reported disappointing results for the first
quarter of 2012. The company reported sales of $383.8 million in
the first quarter of 2012, down 16% sequentially and 28% year over
The reported revenues missed management's revised guidance range
of $416.5 million - $425.9 million.
Management stated that the decline in Altera's first-quarter
revenue was more severe than the company's expectation. This was
primarily due to a significant decrease in demand late in the
quarter by Telecom and Wireless customers. This end market is the
largest vertical market for the company. Consequently, orders did
not come in as the company expected and the company also faced
product mix issues in its industrial business.
The sequential decline in revenues was due to a continued
inventory reduction across most markets along with weakness in the
communications end market.
Nevertheless, Altera was encouraged by the strong bookings in
March as inventory correction by most customers was almost over.
The company has also stocked up buffer inventories to ease supply
constraints faced in the March quarter.
Altera has a pipeline of 28 nanometer products, which should
help it sustain growth levels. We believe the company has an edge
over its competitor
) at the 40nm and 28 nm node. Hence, the company might be able to
revive growth earlier than expected.
We expect business to revive in the second half of 2012 and
hence maintain our Neutral recommendation. Our recommendation is
supported by a Zacks #3 Rank, which translatesinto a short-term
rating of Hold.
ALTERA CORP (ALTR): Free Stock Analysis Report
XILINX INC (XLNX): Free Stock Analysis Report
To read this article on Zacks.com click here.