ALTR Altair Engineering Inc

Earnings estimates have declined a bit in the last seven days after Altera Corporation (ALTR) narrowed its guidance for the first quarter of 2012.

Last week, Altera announced that it now expects revenues to decline by 7% - 9% compared to the earlier projection of a decline of 5% - 9%.

The company had previously forecasted 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.

Consequently, sixteen out of the twenty-three analysts covering the stock have decreased their estimates for FY 2012. The current Zacks Consensus Estimate for 2012 is $1.75, down by $0.04 in the last seven days.

Twelve out of the twenty-two analysts covering the stock have decreased their estimates for the first quarter of 2012.

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.

In January, Altera reported sales of $457.8 million in the fourth quarter of 2011, down 12% sequentially and 18% year over year.

The reported revenues surpassed management’s revised guidance of $438.9 million – $454.6 million and Zacks Consensus Estimate of $451 million.

Altera reported a net income of $146.6 million or 45 cents per share compared to a net income of $185.4 million or 57 cents per share in the third quarter of 2011 and a net income of $231.6 million or 72 cents per share in the year-ago quarter. The reported figure beat the Zacks Consensus Estimate of 41 cents.

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.

 
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