Updated from 4:54 p.m. ET
missed analysts' expectations for the fourth quarter by a penny Thursday, booking 25 cents a share in earnings, excluding extraordinary gains, as the company's revenue came in below its anticipated level.
In addition, the San Jose, Calif.-based company lowered revenue guidance for 2001.
Analysts expected Altera to report earnings of 26 cents a share, down from the 28 cents a share it reported in the previous quarter but up from 17 cents a share in the year-ago quarter, according to
First Call/Thomson Financial
Revenue fell 7% to $368 million from $395.4 million in the previous quarter and was below the expected $402.31 million. It was an improvement over the $237.32 million in the year-earlier quarter.
Chief Financial Officer Nathan Sarkisian said on a conference call that the company fell short of expectations because of a much worse than expected increase in inventories in December. The major culprit for the inventory increase was the
poor market for digital subscriber lines, a type of broadband service. Altera supplies DSL providers.
In late November, Altera
warned Wall Street that fourth-quarter revenue was expected to be flat from the third quarter. It also said that it saw first-quarter revenue rising less than 5% and 2001 revenue increasing 35%.
But Altera Thursday lowered its outlook for first-quarter revenue to a decrease of 5% from the fourth quarter, citing continuing inventory issues both at the company and in the supply chain. For 2001, Altera now expects revenue growth of 10% over 2000. Sarkisian said that the potential effect of a slowing economy on demand during the second half, when the company expects growth to resume, contributed to its lowered outlook.
Sarkisian did offer hope that Altera has turned the corner. "The first few weeks of January seem to indicate that things have bottomed, but unfortunately, at a pretty low level," he said.
Altera makes programmable logic devices, or PLDs, which are chips that customers can program. These chips are used primarily in the telecommunications sector, which experienced a spending slowdown during the fall as worries about the weakening economy settled in. That created an inventory build-up that affected not only Altera but also other PLD makers. Other makers of chips that go into other telecommunication applications, as well as the personal computer, wireless and consumer markets, also have been hit by high inventories and light demand.
Altera's news came one day after competitor
missed Wall Street expectations by a penny,
reporting fiscal third-quarter earnings of 31 cents.