Altera 2Q Net Down 52% On Lower Margins, Revenue

   DOW JONES NEWSWIRES 
 

Altera Corp.'s (ALTR) second-quarter profit tumbled 52% as revenue and margins fell, while the results were also lowered by a $11.5 million tax expense charge.

Still, shares climbed 4.5% to $17.30 in after-hours trading, as the logic-chip maker's sales momentum continued on a sequential basis and adjusted earnings topped analysts' estimates.

However, some on Wall Street have been skeptical of how much the recent recovery in chip orders reflects an improvement of industry fundamentals. Altera sees third-quarter revenue dropping sequentially, issuing a target below analyst expectations.

The company reported earnings of $47.4 million, or 16 cents a share, down from $98 million, or 32 cents a share, a year earlier. The latest quarter included an additional charge of 4 cents per share as a result of the U.S. court ruling related to worldwide equity compensation cost sharing. Altera wasn't a party to the case.

Analysts polled by Thomson Reuters expected per-share earnings of 16 cents.

Revenue decreased 22% to $279.2 million. Last month, the company backed its projection for a 2% to 7% sequential rise in revenue, translating to a range of $269.9 million to $283.1 million.

Total operating expenses dropped 7.1%. Gross margin fell to 66.5% from 67.1%.

Looking ahead, Altera expects third-quarter sales to go down 1% to 5% sequentially. That range would be $265.2 million to $276.4 million, lower than Wall Street's view of $279 million.

The company also predicted gross margin of 67%, plus or minus half of a percentage point.

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

-By John Kell, Dow Jones Newswires; 212-416-2480; [e-mail]