Altera Is Better Positioned Than Xilinx For 2005
12.22.04, 10:31 AM ET
Merrill Lynch said Altera (nasdaq: ALTR - news - people ) is better positioned over Xilinx (nasdaq: XLNX - news - people ) for the next year. The research firm raised its 2005 earnings-per-share forecast on Altera to 61 cents from 58 cents. "We're still cautious on the prospects for the semiconductor business in 2005, and our ratings on both Altera and Xilinx still stand at 'neutral,'" Merrill Lynch said. "In Altera's case, though, we think that the company can at least get close to consensus earnings expectations of 62 cents, whereas our 86 cents estimate for Xilinx in calendar 2005 is more meaningfully below the consensus 95 cents estimate." Merrill Lynch said the case for better growth in Altera's high-end FPGA [field programmable gate array] business is becoming increasingly clear and that Altera's newer Stratix family is positioned to provide revenue growth that Xilinx cannot match with Virtex II Pro, its own high-end volume product. However, Xilinx may see a solid revenue ramp from its value-priced Spartan 3, according to Merrill Lynch, and some of the earlier gains that Altera enjoyed with its Cyclone product could reverse. "The two companies are very similarly valued, with Altera trading on 33 times our forecast calendar 2005 earnings as compared to 34 times for Xilinx," Merrill Lynch said. "We think Altera deserves a premium." |
