NEW YORK (TheStreet) -- Shares of Altera (ALTR) are higher by 6.15% to $51.85 in Monday morning's trading session after Intel (INTC) agreed to buy the semiconductor company for about $16.7 billion in cash, or about $54 a share.
Intel's deal for the San Jose-based company is its biggest since it bought security software maker McAfee in 2011 for $7.7 billion, Reuters reported.
The merger will combine Intel's leading-edge products and manufacturing process with Altera's leading field-programmable gate array technology.
"Given our close partnership, we've seen firsthand the many benefits of our relationship with Intel-the world's largest semiconductor company and a proven technology leader, and look forward to the many opportunities we will have together," said Altera CEO John Daane.
"With this acquisition, we will harness the power of Moore's Law to make the next generation of solutions not just better, but able to do more," said Intel CEO Brian Krzanich.
The acquisition is expected to close within six to nine months, the companies said.
Shares of Intel are falling 1.5% to $33.94.
Separately, TheStreet Ratings team rates ALTERA CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALTERA CORP (ALTR) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, ALTR's share price has jumped by 41.26%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ALTR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 4.41, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has slightly increased to $136.63 million or 4.75% when compared to the same quarter last year. Despite an increase in cash flow, ALTERA CORP's cash flow growth rate is still lower than the industry average growth rate of 20.26%.
- The gross profit margin for ALTERA CORP is rather high; currently it is at 67.05%. Regardless of ALTR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ALTR's net profit margin of 21.78% compares favorably to the industry average.
- ALTR, with its decline in revenue, slightly underperformed the industry average of 0.8%. Since the same quarter one year prior, revenues slightly dropped by 5.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: ALTR Ratings Report