Altera first-quarer profit down 48% on sales slump

Published: Apr 19, 2012 5:12 p.m. ET




Altera Corp.'s ALTR, +0.61% first-quarter profit slumped a 48% as weaker demand from some wireless customers dragged sales much lower than expected.

Altera's earnings have declined for the past three quarters amid tepid demand from virtually all of its major vertical markets. The company, which makes programmable logic chips used in a range of electronics and industrial equipment, most recently pointed to weakening military sales in North America, where the Pentagon has reined in spending to comply with sharp federal budget cuts.

Many semiconductor companies have signaled a rebound by issuing bullish forecasts in recent months, but Altera has been held back by a particularly slow recovery in wireless spending.

"Demand in the last month of the quarter was generally lighter than forecasted, particularly from customers in the communications vertical market," Chairman and Chief Executive John Daane said. "In addition, we experienced some mix issues as we attempted to fulfill orders that arrived in the last month of the quarter."

Daane added that the company's backlog has since significantly improved due to stronger demand.

Altera reported a profit of $116.1 million, or 35 cents a share, down from $224.1 million, or 68 cents a share, a year earlier. Analysts were expecting 36 cents a share.

Revenue fell 28% to $383.8 million. The company's narrowed March forecast called for $416.6 million to $425.8 million of revenue.

Gross margin narrowed to 70.1% from 72.6%.

For the current quarter, the company predicted revenue will grow 14% to 18% over the latest result, indicating a top line between $437.5 million and $452.8 million. Analysts' average estimate called for $451 million, according to a poll by Thomson Reuters.

Shares rose fractionally to $38.75 after hours. The stock was off 10% over the past year through Thursday's close.

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