Back to top

Analyst Blog

Altera Corporation (ALTR - Analyst Report) recently narrowed its guidance for the first quarter of 2012. 

The company now expects revenues to decline by 7% - 9% compared to the earlier projection of a decline of 5% - 9%.

Management had earlier projected revenues to decline as a result of the program timing in the military vertical market and continued softness in sales to wireless customers.

The company expects revenues from wireless segment to move lower across multiple geographies due to continued inventory depletion and softening demand in the second half of 2011.

However, as the quarter progressed, Altera experienced a more pronounced and broader than anticipated inventory adjustment related weakness leading to a more significant decline.

Earlier, earnings estimates declined significantly with the release of fourth quarter results after the company provided a weak guidance for the first quarter of 2012. Altera has a large exposure to the telecommunications industry, in particular China. The recent slowdown in China has adversely impacted the company’s business with no relief in the forthcoming quarter.

The new guidance implies revenue guidance between $416.5 million and $425.9 million compared to the previous forecast of $416.5 million and $434.9 million.

Nevertheless, Altera continues to expect that revenue in the second quarter of 2012 will be above first quarter levels. The book-to-bill remains above 1.0 for the quarter.

The guidance had a minimal impact on stock price which inched just 0.73% in regular trading and 0.21% in after-market trading to close at $37.50.

Altera is expected to report first quarter results on April 19, 2012. We do not expect a drastic improvement before the second half of 2012. The weak guidance prompted us to downgrade our recommendation to Underperform from Neutral in January.

We continue to maintain an Underperform recommendation on Altera. Currently, we have a Zacks #3 Rank on the stock which translates into a short-term rating of Hold.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%