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Chipmaker Altera Corporation (ALTR - Analyst Report) reported sales of $383.8 million in the first quarter of 2012, down 16% sequentially and 28% year over year.

The reported revenues missed the management’s revised guidance of $416.5 million – $425.9 million.

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. The company also faced product mix issues in its industrial business.

The sequential decline in revenues was due to a continued inventory reduction across most markets along with weakness in the communications end market.

Military revenue decreased due to program timing. Wireless & Telecom came in at lower than management’s expectation as forecasted turns orders did not materialize in the last month of the quarter. Computer and Storage decreased due to inventory reduction and program timing.

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.

Moving onto margins, gross margin came in at 70.1%, same as the previous quarter, but down from 72.6% in the year-ago quarter. Operating margin came in at 30.4%, down from 35.0% in the previous quarter and 45.8% in the year-ago quarter.

Altera reported a net income of $115.8 million or 35 cents per share in the first quarter of 2012 compared to a net income of $146.6 million or 45  cents per share in the previous quarter and a net income of $224.0 million or 68 cents in the year-ago quarter. The reported figure missed the Zacks Consensus Estimate by a penny.

Meanwhile, the company's board will pay a quarterly dividend  of 8 cents per share, which will be paid on June 1, 2012 to stockholders of record as of May 10, 2012.

Going forward, Altera expects sales to be up 14% – 18% sequentially. This implies a revenue guidance of $437.5 million – $452.9 million.

Altera, which competes with Xilinx, Inc (XLNX - Analyst Report), 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.

The company experienced lengthening of foundry lead times mainly for 28nm and 40nm product. Management expected tightening foundry capacity and hence secured more inventories.

Although results missed the estimates, guidance provided by Altera Corporation was in-line. Hence, most investors were indifferent to results with share price gaining just 0.26% in after-hours trading as the stock closed at $39.46. In regular trading, shares were up 0.03%.

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