DOW JONES NEWSWIRES 
 

Altera Inc. (ALTR) backed its second-quarter projection for a 2% to 7% sequential rise in revenue as demand continued for 2G and 3G equipment from Asian wireless networks.

The logic-chip maker had first issued the surprisingly strong sales guidance, which translates to a range of $269.9 million to $283.1 million, in April. At the time, the company indicated that signs of strength beginning to show in the first quarter had continued into the second.

On Monday, Altera noted new products have been driving growth in the second quarter. Sales of 65-nanometer devices are up sharply, while 40-nm devices are on track to double from the first quarter, as the company expected.

The optimistic outlook continues the upbeat tone from Altera's first-quarter report, when the company said the quarter had shaped up better than expected even though earnings fell by nearly half. Sales to wireless-equipment customers, including those targeting new 3G deployments in China, were a bright spot.

However, some on Wall Street have been skeptical of how much the recent recovery in chip orders reflects an improvement in industry fundamentals, with Robert W. Baird & Co. saying that most of the strength is a result of inventory replenishments that will eat into second-half orders.

Morgan Stanley has also raised concerns that China's demand for 3G equipment might slow down in the third quarter, with a recovery thereafter uncertain.

Wireline telecoms, which represent about 15% of Altera's revenue, have cut capital spending plans for 2009.

Altera designs chips for use in products such as Internet routers, mobile-phone base stations, flat-panel televisions and DVD players.

Its shares were down 0.5% at $17.58 in after-hours trading, giving back one-quarter of its gain during the regular session. The shares have risen one-third in the past seven months but remain off more than a quarter from their 52-week high in mid-August.

-By Jay Miller, Dow Jones Newswires; 201-938-2331; jay.miller@dowjones.com