Earnings Preview: Altera Corporation - Analyst Blog
April 21 2011 - 9:15AM
Zacks
Altera Corp. (ALTR) is expected to report first
quarter results on April 26, 2011.
In March, Altera reiterated its sales guidance for the first
quarter of 2011. Altera expects a sequential revenue decline of 1%
to 5% in the first quarter. The decline in sales implies a sales
guidance of $527.8 million - $549.9 million.
Management expects that the Industrial, Automation, Military and
Automotive vertical will be up
sequentially driven by an increase in demand from military and
automotive markets. Sales in other verticals are
estimated to be flat to down.
Revenues from Telecom & Wireless are expected to decline as
few customers
have rebalanced their inventories as the fourth round of
TD-SCDMA deployment was completed in the fourth quarter. This
should be partially offset by growth in WCDMA and LTE. Computer and
Storage Networking is projected to be flat or down slightly.
Gross margin is expected to come around 71% – 72%.
Altera stated that design wins in 40-nanometer are well ahead of
any previous generation products. Altera continues to benefit from
the growth in 65-nm and 40-nm FPGAs as customer designs move from
prototyping to production. We believe the company gained market
share in 2010 vis-à-vis its rival Xilinx
Corporation (XLNX).
In 2010, Altera focused on 28-nm development and will introduce
more products in 28-nm than any previous process node in the coming
years. Altera has taped out its
first Stratix V 28-nm family member in December and plans the
sample in the first quarter.
The current Zacks Consensus Estimate for the first quarter is
$0.65, up by a cent in the last seven days. We expect another
strong quarter from Altera. Altera has consistently beaten
estimates. On an average, Altera beat estimates by 10.50% in the
last four quarters.
We maintain a Neutral recommendation on Altera supported by a
Zacks #3 Rank which implies a short-term rating of Hold.
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