Altera Doesn't Raise Guidance

Altera Corp. (ALTR, Buy) issued its mid-quarter update for Q2, ending in June, yesterday. Judging from the share-price performance so far today (down nearly 5%), investors appear to have taken the news with a grain of salt. Perhaps the absence of an upside in guidance is the reason for the shares negative performance so far today.

Investors may recall that ALTR shares got a boost last week following a sell-side analyst raising his Q2 EPS estimates by a penny, compared to our and consensus estimates of $0.16, based mainly on expectation that the company will boost its second-quarter forecast during the mid-quarter update. Apparently the company has not done so, resulting in a reversal of gains from last week.

But it remains to be seen whether the company can deliver improved results compared to our and consensus expectations, given the company’s reiteration that “demand from OEMs providing equipment for Asian 2G and 3G wireless networks remains strong.” The Asian market, particularly China, has been the primary driver for ALTR’s sales growth, with China Unicom's (CHU) recent equipment decisions driving sales of programmable logic devices. China's wireless infrastructure market takes up around 10 percent of Altera's sales.

Based in San Jose, California, Altera Corporation designs, manufactures, and markets a broad range of high-performance, high-density programmable logic devices (PLDs) such as field-programmable gate arrays (FPGAs) and complex programmable logic devices (CPLDs). We have a Buy rating on the shares.

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Read the full analyst report on CHU