Altera Prices Senior Notes

Altera Corporation (ALTR - Analyst Report) 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 - Snapshot Report) and Xilinx Inc. (XLNX - Analyst Report) 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.