Monday, July 18, 2011

Altera Corp. (NASDAQ: ALTR): Q2 Earnings Preview 2011

Altera Corp. (NASDAQ: ALTR) is scheduled to release its second-quarter earnings after the closing bell on Tuesday, July 19, 2011. Analysts, on average, expect the company to report earnings of 64 cents per share on revenue of $548.76 million. In the year ago quarter, the company reported earnings of 58 cents per share on revenue of $469.30 million.

Altera Corporation designs, manufactures, and markets programmable logic devices (PLD), HardCopy application-specific integrated circuit (ASIC) devices, pre-defined design building blocks, and associated development tools.

The company has now seen net income rise in three straight quarters. Altera has enjoyed double-digit year-over-year percentage revenue growth for the past four quarters.

In the preceding first quarter, the San Jose, California-based  company's net income was $224.1 million, 68 cents per share, $153.2 million, 50 cents per share, in the year-ago quarter. Net sales increased 33% to $535.8 million from $402.3 million in the same quarter last year. Analysts, on average, expected the company to report earnings of 65 cents per share on revenue of $536.63 million.

Last month, the company reaffirmed that it continues to expect second quarter sales to be in line with its previous guidance for flat to up five percent sequential growth. Further, the company said it continues to believe that the Telecom and Wireless vertical market would be up sequentially, while the company's other vertical markets would be flat to down..

In the long run, Altera expects its largest vertical – telecom and wireless to continue growing but, industrial, military and automotive will grow faster than other end-markets. Altera expects gross margin to gradually decline to 65% by 2012 – 2015. The company targets an operating margin around 36%.

The company continues to benefit from big trends in the build-out of next-generation wireless networks. The company is enjoying strong demand for its chips used in cell phone base stations, network routers, digital cameras and other areas. But earnings increases are seen slowing as countries finish building out their 3G and 4G wireless networks, and year-ago comparisons become more difficult. Rebounds in the auto and industrial markets also are providing a lift. It is also grabbing share from competitors while maintaining its focused strategy to lead in speed, density, low-power consumption, time-to-market and high-value features.

China has been a major source of growth for Altera as its versatile chips become more appealing to customers facing spiraling investment costs to develop specialized processors. The maker of programmable logic devices will likely get a spark from China Mobile's increased infrastructure spending. China's top mobile carrier plans $20.2 bil in capital spending this year and $39 bil from 2012-13. 

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