NEW YORK (TheStreet) -- Lattice Semiconductor (LSCC) - Get Report stock is advancing by 7.40% to $6.75 on heavy volume in afternoon trading on Tuesday, after Intel (INTC) completed its $16.7 billion acquisition of chip maker Altera (ALTR) yesterday.
The transaction could boost Lattice's total addressable market by $300 million to $400 million, CEO Darin Billerbeck told Reuters earlier this year.
"I think within communications and the industrial, we'll see some of the benefit right away," he said.
The acquisition allows Lattice and rival Xilinx (XLNX) to take a larger portion of the ARM-based market, as Intel and Altera's combined company will likely focus on providing chips for x86 rather than ARM-based processors, Reuters reported.
Additionally, as of June Lattice was at the top of FBR Capital Markets's list for financially attractive deals, Barron's reported.
Lattice is one of a few standalone programmable-chip makers remaining in the industry, and might be open to a sale. "If someone walks in the door and gives us a solid offer at a high premium we are going to consider it," Billerbeck told Reuters at the time.
Yesterday, Intel indicated that Altera will serve as a model for future acquisitions.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate LATTICE SEMICONDUCTOR CORP as a Hold with a ratings score of C-. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 9.6%. Since the same quarter one year prior, revenues rose by 26.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- LSCC's debt-to-equity ratio of 1.00 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that LSCC's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.84 is high and demonstrates strong liquidity.
- The gross profit margin for LATTICE SEMICONDUCTOR CORP is rather high; currently it is at 62.85%. Regardless of LSCC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LSCC's net profit margin of -22.66% significantly underperformed when compared to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 364.3% when compared to the same quarter one year ago, falling from $9.41 million to -$24.86 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, LATTICE SEMICONDUCTOR CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: LSCC