Back to Main

Altera Prices Senior Notes - Analyst Blog

Posted: 5/7/2012 7:15:00 PM
Referenced Stocks: ALTR;LSCC;XLNX

Altera Corporation ( ALTR ) declared senior notes pricing of its 1.75% Senior Notes with principal amount $500 million, due to mature in 2017. The company is likely to close the transaction on May 8, 2012.

Book-running managers currently acting for this notes offering are J.P. Morgan Securities L.L.C., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. LLC.

The net proceeds from the offering along with its cash balances shall be used to repay the company's outstanding loans of nearly $500 million which would then result in the termination of Altera's Credit Agreement, dated August 31, 2007.

The company declared quite a weakened performance in its first quarter financial results of 2012, reported on April 19, 2012. Revenues dropped around 28% annually to reach $384 million in the quarter. Margins were under pressure too as operating margin declined substantially from 45.8% in the year-ago quarter to 30.4% in the first quarter of 2012.

Furthermore, the company pertains to an industry where ominous competition is prevalent. It should stay cautious of big players such as Lattice Semiconductor Corporation ( LSCC ) and Xilinx Inc. ( XLNX ) as it traverses through 2012.

Moving forward, the company is hopeful of strong recovery in the upcoming quarter of 2012 where it expects sales to be within the range of $437.5 million - $452.9 million, rising approximately 14% - 18% sequentially. The Zacks Consensus Estimate for the fiscal years 2012 and 2013 stands at $1.69 and $2.15, representing 27.91% year over year decline and 27.08% growth, respectively.

In the short run, the stock bears a Zacks #3 Rank, which translates into a short-term Hold rating. Additionally, we currently maintain a long-term Neutral recommendation on the stock.

ALTERA CORP (ALTR): Free Stock Analysis Report
LATTICE SEMICON (LSCC): Free Stock Analysis Report
XILINX INC (XLNX): Free Stock Analysis Report
To read this article on click here.
Zacks Investment Research