) reported earnings of 31 cents per share in the second quarter
of 2013, in line with the Zacks Consensus Estimate.
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Altera reported total revenue of $421.8 million in the second
quarter, down 9.3% year over but up 2.7% sequentially. The
quarter's revenues came below the Zacks Consensus Estimate of
$425.0 million and were within management's guidance range of
flat to up 4.0% sequentially. The year-over-year decline was
mainly due to weakness in mainstream and matured products, almost
all the end-markets (barring auto, industrial & military) and
the Americas and Asia-Pacific regions.
Sales of new products grew 20.0% from the year-ago quarter, while
revenues from mainstream and mature products declined 14.0% and
Geographically, revenues from Americas and Asia-Pacific declined
12.0% and 22.0%, respectively on a year-over-year basis. Revenues
from Europe, Middle East and Africa (EMEA) and Japan grew 11.0%
and 2.0%, respectively. On an end-market basis; telecom and
wireless declined 16.0%, networking, computer & storage
decreased 6.0% and the Other category declined 8%. However,
the automotive, broadcast, military end market posted 2.0%
Sequentially, Altera witnessed solid performances from all the
geographical regions (except Americas), product category and end
Gross margin came in at 68.0%, down from 69.6% in the year-ago
quarter and within management's expected range. Operating margin
came in at 26.6%, down from 34.3% in the year-ago quarter. Total
operating expenses grew 6.2% year over year, reflecting 8.5%
growth in sales and marketing expenses and 3.6% increase in
research and development expenses.
Reported net income was $101.5 million or 31 cents per share
compared with $162.7 million or 50 cents per share in the second
quarter of 2012.
Balance Sheet & Cash Flow
Altera exited the quarter with a cash and short-term investment
balance of $2.95 billion and operating cash of $64.5 million.
Capital expenditure was $8.7 million.
Altera spent $54.9 million for repurchasing shares and roughly
$32.0 million for paying dividend.
Altera expects sales to grow 5.0%-9.0% sequentially in the third
quarter of 2013. The revenue improvement could be due to an
expected turnaround in telecom & wireless, auto, industrial
& military and networking & storage end markets. The
Others category is expected to remain flat sequentially.
Management projects gross margin of roughly 68.0% in the third
quarter, in line with the second quarter. Research and
development expenses are expected in the range of $99.0 million
to $101.0 million, while selling, general and administrative
(SG&A) expenses will range between $80.0 million and $82.0
million. Tax rate is expected in the range of 12.0%-13.0%.
Altera has delivered mixed second quarter 2013 results with
earnings beating the Zacks Consensus Estimate and revenues
missing the same. Overall year-over-year performances were weak
while sequential performances provided some hope. Guidance for
the upcoming quarter was encouraging, citing some turnaround in
the end markets.
Last week, Altera's archrival
) reported impressive first quarter 2014 results and provided a
better sequential expectation for the second quarter citing
higher revenues from all geographic regions, better demand
situation for its 28nm node products and expected traction in its
20nm products, which are ready to be shipped. Xilinx also
announced its extended partnership with foundry partner
Taiwan Semiconductor Manufacturing Ltd.
) for transition into 16nm nodes by 2014.
Though Altera's association with chip maker
) will keep it ahead of its peers, synergies from the partnership
is not likely to boost fundamentals in the near term. But
Altera's solid book-to-bill ratio and backlog position are
Currently, Altera holds a Zacks Rank #2 (Buy).