Altera Walks Delisting Tightrope

A delayed earnings report could take its shares off the Nasdaq.
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Altera

(ALTR) - Get Report

has been threatened with having its shares delisted from the

Nasdaq

, the latest development in a controversy over stock option accounting practices that has enveloped several chip companies.

The San Jose, Calif., maker of programmable logic chips announced late Wednesday that it had received a notice from Nasdaq officials informing it that it was not in compliance with the exchange's regulations because of its decision to delay the filing of its quarterly earnings report. The Nasdaq staff determination notice said that Altera's stock will be delisted from the exchange unless Altera officials request a hearing before a special Nasdaq panel.

Altera said it has requested such a review and that its stock would remain listed on the Nasdaq until a decision is made on the matter. The company said there was no assurance that the panel would grant its request for continued listing on the Nasdaq.

Shares of Altera slid 2%, or 40 cents, to $19.03 in recent trading Thursday.

Altera is among several companies to be swept up in a controversy involving so-called backdating of employee stock options, a practice whereby options are granted or priced in ways meant to take advantage of favorable news or lower prices. The practice was first disclosed in a

Wall Street Journal

article in March, which reported that the U.S.

Securities and Exchange Commission

is examining backdating at a dozen companies.

On Wednesday,

Vitesse Semiconductor

(VTSS)

fired its CEO and two other senior executives as a result of its own internal inquiry into the company's stock option accounting practices.

Earlier this month, Altera announced that it had set up a special committee of independent directors, working in conjunction with outside legal counsel, to review the company's historical stock option practices and related accounting. As a result, Altera said, it would not be able file its 10-Q report with the SEC for the period ending March 31, 2006.

The company said it intends to file the quarterly report after the internal review is completed.