Altera Dims Sales View

The chipmaker now expects fourth-quarter revenue to decline between 5% and 7% sequentially.
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Altera

(ALTR) - Get Report

said sales in the current quarter are slower than expected.

In a midquarter update released after Tuesday's market close, the San Jose, Calif., maker of programmable chips said it now expects fourth-quarter sales to decline between 5% and 7% sequentially.

That suggests a range of $317 million and $324 million. Analysts polled by Thomson Financial were looking for $329.4 million in sales with 25 cents EPS.

In its initial guidance

delivered in November, Altera projected a smaller 2% to 5% decline in fourth-quarter revenue.

On Tuesday, Altera said sales of mainstream and mature products have declined so far this quarter, although sales of its new products continue to improve.

Sales are also being pressured by an inventory accumulation of the FPGA chips that account for roughly 70% of the company's revenue.

"As anticipated, customers are reducing FPGA inventory leading to slower FPGA sales quarter-to-date, and sales to the wireless infrastructure market remain weak," the company said in a statement.

Altera said it still expects that sequential sales growth will resume in the first quarter of 2007.

Shares of Altera were recently off .34%, or 7 cents, at $20.23 in extended trading.

On Monday, shares of Altera rose 3.7% after A.G. Edwards analyst David Wong upgraded his rating on the stock from a buy to a hold, citing the resolution of stock option accounting issues, among other things.