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Technology Stocks : Altera -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (2336)	10/25/2005 2:01:28 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 2389

Altera Shares Drop on Downgrades Tuesday October 25, 1:47 pm ET Chipmaker Altera Shares Drop on Analyst Downgrades and Lackluster Guidance NEW YORK (AP) -- Shares of chipmaker Altera Corp. plunged to a new 52-week low Tuesday after analyst downgrades in the wake of the San Jose, Calif. company's lackluster guidance and pricing pressures. Altera's shares fell $1.29, or 7.3 percent, to $16.44 in afternoon trading on the Nasdaq. Over the past 52 weeks, the company's shares have traded between a low of $16.81 and a high of $24.26. Trading volume more than doubled, to 15.5 million compared with the daily average of 6.5 million. On Monday after the bell, the company reported its third-quarter earnings dropped 6 percent despite a 10 percent sales increase, weighed down by a higher income tax provision. Earnings fell to $77.8 million, or 21 cents per share, from $83.1 million, or 22 cents per share. Sales grew to $291.5 million from $264.6 million. On average, analysts surveyed by Thomson First Call forecast earnings of 20 cents per share on revenue of $291.3 million. The company also forecast fourth-quarter sales would be flat with the third quarter, plus or minus 2 percent. Wall Street expects higher fourth-quarter sales of $302.9 million. Altera also said it expects its 2006 gross margin to be about 65 percent, versus a prior view of 66 percent. Three analysts downgraded the company to "Neutral" Tuesday. JPMorgan analyst Christopher Danely lowered his previous "Overweight" rating and wrote that the company lowered its 2006 gross margin guidance "again" from 66 percent to 65 percent, in line with its long-term target but below the analyst's 66 percent estimate, due to pricing pressure and lower sales from higher-margin products. The analyst maintained his 2005 revenue and earnings estimates but lowered his 2006 expectations to earnings of 90 cents per share on revenue of $1.30 billion, from 93 cents per share on revenue of $1.35 billion. On average, analysts are expecting 2006 earnings of 92 cents per share on sales of $1.34 billion. Danely wrote he believes there is a risk to revenue and earnings per share estimates, and as a result he sees the company's stock as "fairly valued." Harris Nesbitt analyst Ambrish Srivastava had previously recommended the stock on "superior leverage, based on stable margins and better top-line versus rival chipmaker Xilinx Inc.," he wrote. However, in his client note downgrading the company from "Outperform" to "Neutral," he called his original thesis "broken" and reduced his price target to $17 from the previous $24. While the analyst said he has been correct on the top-line competition with Xilinx, which Altera has consistently outperformed, "boy, have we been wrong on the margin front," he wrote. The company first lowered its 2005 and 2006 margins during its mid-quarter update in September, and again during its third-quarter earnings call Monday. Reasons for declining margins could range from additional competitive pressure to lower prices, as well as a shift toward lower margin products, Srivastava wrote. The analyst increased his 2005 earnings estimate by 1 penny to 75 cents per share, but lowered his 2006 forecast by 3 cents to 84 cents per share. Fulcrum analyst Suji De Silva downgraded the company to "Neutral" from "Buy" citing increased margin uncertainty, which reflects intensifying competition. The analyst also lowered the price target to $18 from $24. DeSilva also lowered his 2006 projection to earnings of 86 cents per share on sales of $1.29 billion, from the previous 94 cents per share on sales of $1.33 billion.