Reuters: Global Markets: Altera forecasts tepid demand for telecom products

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Altera forecasts tepid demand for telecom products Oct 22nd 2013, 22:45 Share this Email Print Reprints By Aurindom Mukherjee Tue Oct 22, 2013 6:45pm EDT (Reuters) - Programmable-chip maker Altera Corp forecast current-quarter revenue below Wall Street estimates, citing fewer orders for its telecom and wireless products, sending its shares down 5 percent after the bell. Altera, which also reported lower-than-expected sales for the quarter ended September 27, forecast current-quarter revenue to be down 3 percent to up 1 percent, compared with the third quarter. That implies fourth-quarter revenue of between $432.5 million and $450.5 million. Analysts on average were expecting revenue of $474.5 million, according to Thomson Reuters I/B/E/S. Altera forecast revenue in its telecom and wireless business, the company's biggest, to be flat. "There was a belief that the China Mobile build out was going to drive more revenues," RBC Capital Markets analyst Doug Freedman told Reuters. Altera's two biggest customers, Huawei Technologies Co Ltd and ZTE Corp, have secured more than half of China Mobile's initial 4G contracts worth about 20 billion yuan ($3.2 billion), sources said in August. There was an expectation that it was going to show in their revenues "but it clearly is not," Doug added. Semiconductor chips made by Altera and Xilinx are sold off the shelf and can be programmed by customers to do specific tasks, eliminating hefty expenses to develop custom chips. Xilinx forecast current-quarter revenue largely below Wall Street estimates last week and said its overall growth rate of the wireless business would be offset in part by a "business transition" at one of its large European customers. Analysts speculated the large customer could be Ericsson, and they expect Altera to gain from Ericsson's move. However, on being asked by Nomura Equity Research analyst Romit Shah in a post-earnings conference call, Chief Executive John Daane said "we would expect that there will be more ramp transitions over time that will benefit Altera from a market share perspective, but there is nothing specifically that happened in the third calendar quarter or in the fourth calendar quarter." Altera's net income fell to $119.4 million, or 37 cents per share, in the third quarter, from $157.5 million, 49 cents per share, a year earlier. Revenue fell 10 percent to $445.9 million. Revenue from the telecom and wireless business decreased to 41 percent to $182.8 million. Analysts on average had expected earnings of 34 cents per share on revenue of $451.8 million. Altera shares fell to $35.50 in extended trading after closing at $37.32 on the Nasdaq on Tuesday. (Reporting By Aurindom Mukherjee in Bangalore; Editing by Maju Samuel) Link this Share this Digg this Email Reprints

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