Earnings estimates for
) have moved south, ahead of the company's second-quarter results
on July 24, 2012.
Altera projects 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.
However, estimates continue to maintain a downward trend. Of the
twenty-one analysts covering the stock, four have reduced their
estimates in the last seven days while seven in the
last thirty days.
Altera has missed estimates twice in the last fourth quarters
and hence analysts continue to be sceptical about the company's
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 Altera
expected and the company also faced certain product mix issues in
its industrial business.
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. However, the company
currently has a Zacks # 4 Rank, which translates into a short-term
rating of Sell due to the near-term weakness.
ALTERA CORP (ALTR): Free Stock Analysis Report
XILINX INC (XLNX): Free Stock Analysis Report
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