We continue to maintain a Neutral recommendation on
) ahead of its third quarter 2012 results, expected on October
Last month, Altera updated its guidance for the third quarter
of 2012. Altera expects revenue growth of 2% - 6% on a sequential
basis, in line with the guidance provided during the second
quarter results. This implies a revenue guidance of $437.5
million - $452.9 million.
Altera continues to see traction in the 28-nanometer node and
expects revenue from this node to exceed $20 million in the third
quarter. Revenue from 40-nanometer node is also expected to grow
New products are expected to be the growth drivers for the
third quarter with sales of both 40nm and 28nm products estimated
to rise substantially.
End-market wise, Telecom and Wireless markets are expected to
witness growth. Industrial Automation, Military and Automotive
segment is also expected to increase, driven primarily by
Military and Automotive. Networking, Computer and Storage is
expected to be down.
Earnings estimates for fiscal 2012 have been static over the
last few days as the company reiterated its guidance for the
In July, Altera reported better-than-expected second quarter
results. Altera reported a net income of $162.7 million or
50 cents per diluted share, which easily beat the Zacks Consensus
Estimate of 39 cents per share.
Altera returned to sequential quarterly growth after three
quarters of pullback in customer inventory. Most customers ended
their inventory destocking programs and returned to their normal
On an average, Altera has surpassed the Zacks Consensus
Estimate by 7.95% in the last four quarters. We expect the
company to report in line results for the third quarter. The
current Zacks Consensus Estimate for third quarter 2012 is 46
cents with no movement in either direction in the last sixty
Altera has a robust pipeline of 28 nanometer products, which
it believes will maintain the growth momentum in the upcoming
quarters. Meanwhile, Altera increased its quarterly dividend by 2
cents to 10 cents per share.
Altera's prime rival,
) recently reported better-than-expected results for the second
quarter of fiscal 2013 but provided a weak guidance for the
December quarter due to continued macroeconomic
Nevertheless, we expect the company's business to revive in
the second half of 2012. Our long-term recommendation is
supported by a Zacks #3 Rank, which translates into a short-term
rating of Hold.
ALTERA CORP (ALTR): Free Stock Analysis
XILINX INC (XLNX): Free Stock Analysis Report
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