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» Altera Corporation Q1 2010 Earnings Call Transcript
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» Altera Corporation Q2 2009 (Qtr End 06/26/09) Earnings Call Transcript
With me today are John Daane, our CEO; and Ron Pasek, Chief Financial Officer. Ron will open the call with a financial overview before turning the call over to John. After John concludes his remarks, we will take your questions. Prior to the Q&A session, the operator will be giving instructions on how you can access the conference call with your questions.I would now like to turn the call over to Ron. Ron Pasek Thank you, Scott. My commentary will cover our results for the second quarter 2010 as well as guidance for Q3 and full year. Revenue for the second quarter 2010 was a record $469.3 million, a sequential increase of 17%. Q2 sequential revenue growth was broad-based. Both large and small customer categories grew, with the highest growth coming from our largest customers. New, mainstream, and mature product categories all grew sequentially. In addition, all geographies and vertical market showed growth quarter-to-quarter. Q2 turns were 35%, which was slightly above our guidance. Incoming orders remained strong, and our book-to-bill ratio was well above 1. Q2 gross margin was 71.7%, a sequential increase of 30 basis points, largely due to continuing const reductions that offset some negative vertical market mix. Operating expenses for the quarter were $130.4 million, an increase of $3 million or 3% sequentially and essentially in line with our guidance. Operating margin dollars grew 208% year-over-year and operating margin percent reached a record at 43.9. Our Q2 effective tax rate was 12.2%. This rate is slightly less than our previous guidance and is the result of relatively stronger revenue growth outside the U.S., which resulted in an overall reduction to our tax rate. Net income for Q2 was $180.6 million or $0.58 per diluted share, an increase of $0.08 over Q1 2010 and an increase of $0.42 over Q2 a year ago.
For Q2 2010, our Board approved a $0.01 per share increase to our quarterly dividend to a total of $0.06 per share per quarter. This is the second dividend increase since 2007 when we introduced a quarterly dividend. As we have frequently noted, we intend to continue to increase the dividend over time.On the balance sheet, cash and investments increased to $2.067 billion and cash flow from operating activities was $246 million for the quarter. Altera inventory increased Q1 to Q2 on a dollar basis, but was unchanged from the months of supply on hand basis. Total pipeline months supply on hand at 3.2 months was comprised of 2.3 months for Altera and 0.9 months for distributors, which is identical to our ending inventory months supply on hand for Q1 2010. The cash conversion cycle for Q2 was 80 days, which is a 17-day improvement from the unusually high 97 days in Q1 2010. DSO came down and payables increased, which are both good trends from a CCC perspective. Again, our accounts receivable aging continues to remain quite healthy. Stepping back, the second quarter results display a combination of strong end market demand aided by the tipping point dynamics we have been describing for the past several years. Our impressive operating leverage is a function of robust gross margins and extremely focused OpEx management, reflecting the value our PLDs deliver to the customers in a disciplined operating execution. Moving on to guidance for the third quarter, we expect to see revenue growth in the range of 4% to 8% sequentially. Third quarter turns look to be in the low to mid 20s. The third quarter gross margin rate will likely be in the range of 70% to 71%. We are anticipating some gross margin degradation due to a slightly unfavorable vertical mix. R&D spending will be $69 million to $70 million, reflecting incremental hiring we spoke about last quarter to accelerate our 28-nanometer roadmap. SG&A will be between $64 million and $65 million. Our core tax rate will be 12% to 14%. Read the rest of this transcript for free on seekingalpha.com