Earnings estimates for
) have declined quite a bit after the company reported
disappointing first-quarter results.
Altera reported a net income of $115.8 million or $0.35 per
share in the first quarter of 2012, which missed the Zacks
Consensus Estimate by a penny.
Management stated that the decline in Altera's first-quarter
revenue was more severe than the company expected. This was
primarily due to a significant decrease in demand late in the
quarter by Telecom and Wireless customers. Consequently, orders did
not come in as the company expected and Altera also faced product
mix issues in its industrial business.
Altera continues to grapple the slowing of demand as economy
weakens. The sequential decline in revenues was due to a
continued inventory reduction across most markets along with
weakness in the communications end market.
Consequently, seventeen out of the twenty-two analysts covering
the stock decreased their estimates for 2012, leading to a decline
in the Zacks Consensus Estimate.
The current Zacks Consensus Estimate for 2012 is $1.69, down by
$0.06 in the last thirty days and by $0.10 in the last sixty
For 2013 as well, ten out of the twenty-one analysts covering
the stock have decreased their estimates, leading to a $0.05
decline in the Zacks Consensus Estimate in the last thirty
Nevertheless, book-to-bill was positive at the beginning of the
quarter and strengthened as the quarter progressed, and remains
positive for the second quarter as well.Altera stated that the
inventory correction by its customers is mostly completed as
evident from bookings in March. Hence, the company expects
double-digit growth from all end markets -- Telecom, Wireless,
Industrial, Computer Storage and Networking.
Altera has a pipeline of 28 nanometer products, which should
help it sustain growth levels. We believe the company has an edge
) at the 40nm and 28 nm node. Hence, the company might be able to
revive growth earlier than expected.
Although results missed the estimates, guidance provided by
Altera Corporation was in line. We expect business to revive in the
second half of 2012 and hence upgrade our recommendation to Neutral
ALTERA CORP (ALTR): Free Stock Analysis Report
XILINX INC (XLNX): Free Stock Analysis Report
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