Altera Earnings: Margins Turnaround, but Profit Falls

S&P 500 (NYSE:SPY) component Altera Corporation (NASDAQ:ALTR) reported its results for the third quarter. Altera designs and manufactures programmable logic devices, HardCopy ASIC devices, pre-defined design building blocks, cores, and associated development tools.

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Altera Corporation Earnings Cheat Sheet

Results: Net income for the logic development fell to $157.5 million (49 cents per share) vs. $185.4 million (57 cents per share) a year earlier. This is a decline of 15.1% from the year-earlier quarter.

Revenue: Fell 5.3% to $495 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Altera Corporation beat the mean analyst estimate of 46 cents per share. It beat the average revenue estimate of $445.2 million.

Quoting Management: “Despite uneven global economic conditions, Altera experienced relatively broad vertical market sequential growth with both our new and mainstream product categories performing well,” said John Daane, president, chief executive officer, and chairman of the board. “Our 28 nm opportunity pipeline exceeds that of any prior process node as FPGAs continue to displace ASICs. Altera is the only 28 nm FPGA supplier to offer production-qualified devices across our entire range of product families, which gives us clear advantage as we compete for design wins. Altera is the design-win value leader at 28 nm.”

Key Stats:

Revenue has fallen for the last four quarters. Revenue declined 15.2% to $464.8 million in the second quarter. The figure fell 28.4% in the first quarter from the year earlier and dropped 17.6% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has beaten estiamtes for two quarters in a row. In the second quarter, it topped expectations with net income of 50 cents versus a mean estimate of net income of 39 cents per share.

Margins were up in the second quarter, following a drop in the previous quarter. Gross margin grew 1.2 percentage points from the year-earlier quarter to 69.3%. In the first quarter, the figure rose 1.3 percentage points to 69.6% from the year earlier quarter.

Net income has dropped 27.8% year-over-year on average across the last five quarters. Performance was hurt by a 48.3% decline in the first quarter from the year-earlier quarter.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the fourth quarter has risen to 48 cents per share from 47 cents. For the fiscal year, the average estimate has moved up from $1.68 a share to $1.79 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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