Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Stu who wrote (1762)	6/16/1998 1:37:00 PM
From: Matthew	Read Replies (1) \| Respond to of 2389

Stu; I appreciate your analysis on the earnings forecast. I want to take a swag at your questions at the end of your post. 1) If your idea of earnings visibility is customer orders in hand, then I have to say that earnings are not visible. What the company does know is what design wins are being made today. Those design wins translate in revenue contribution at least 6 months out some times 18 months. Customers tell the vendor how many units they expect to sell and from this data the company can generate a sales forecast. While they know who will buy and what products the components will be in, it is the when that is very elusive. Bottom line is there is in fact a good level of visibility in terms of looking out in the future but exact numbers in the near term is very difficult. 2) Your second question is lot more difficult. Two trends have made up the growth of the PLD/FPGA industry. The first is the general ability to replace discrete logic devices. This has become more and more cost effective over the years and HAD accounted for an underlying growth of about 30% over the last 5+ years. The last 3 years when this stock really roared was driven by the kicker that networkers provided. That industry was in a mode in which getting to market was paramount and ASICs just were not a viable option. Of course the internet took off and so did the networkers with volume shipments that were normally reserved for ASIC designs. But with high margins and market share to be won, cost reduction was not on the minds of the networkers. That has changed and has subsequently lowered ALTRs growth. Designs that ALTR (and XLNX for that matter) would normally get have been won by the likes of GALTF, MMC, Maker Communications(the later is still private) as well as internal ASIC designs as the networkers products have been turned more commodity like. Sooo... where does that leave the future? Well the challenge is for the FPGA/PLD vendors to find that next big industry where time to market is key. They will do it I am sure. They will also attempt to add value by offering key standard functions ready to be implemented in their devices. This offers customers the benefit of not having to design some standard portions of their products and having those portions tightly integrated with the propriety portions of their products. (I know that sounds a little vague but I do not want to get to technical on this thread. I you want a specific example I can provide one.) Disclosure: I am long ALTR. Cheers.