) recently 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%.
This translates into revenues of $445.5 million - $465.3
million, down from the previous estimate of $455.4 million -
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 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 compensation.
Other Income/Expense is projected at $1 million. Tax rate is
expected to be 13%. Capital expense is expected to be $65
Earlier, Altera reported a net income of $157.5 million or 49
cents per share in the third quarter of 2012, easily beating the
Zacks Consensus Estimate of 46 cents per share.
Altera reported sales of $495.0 million in the third quarter
of 2012, down 5% year over year but up 6% sequentially.
However, earnings estimates plummeted as most analysts
covering the stock have lowered their guidance. We expect a
further drop in estimates as management trimmed their
The reduction in guidance has led to a 0.16% fall in stock
price in after hours trading. Meanwhile, Altera and its prime
) together hold nearly 87% of the PLD market. However, Xilinx
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.
Margins have already peaked and it might not be sustainable in
the long run. Hence, owing to the macroeconomic weakness, we had
earlier downgraded our recommendation to Underperform from
Our Underperform recommendation is supported by a Zacks #4
Rank, which translates into a short-term rating of
ALTERA CORP (ALTR): Free Stock Analysis
XILINX INC (XLNX): Free Stock Analysis Report
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