As expected, Altera Corporation (ALTR) recently upgraded its guidance for the third quarter of 2010. Altera now expects revenues to grow 10% – 14% sequentially, up from the prior guidance of 4% – 8%.
The new guidance implies revenues between $516.2 million and $535.0 million, compared with the earlier guidance of $488.0 – $506.8 million. The upgrade in guidance was driven by broad-based growth across all of the four vertical markets that the company serves – 1) Telecom & Wireless, 2) Industrial Automation, Military & Auto, 3) Networking, Computer & Storage and 4) Others.
In particular, the telecom and wireless markets are on track to become the fastest growing segment of the business, driven largely by 3G wireless deployments and a solid demand for additional wireless backhaul capacity.
The current Zacks Consensus Estimate (ZCE) for the third quarter is 59 cents with an upside potential of 1.70%. With the upgrade in guidance, we expect further revisions in the ZCE. Earlier, Altera reported strong results for the second quarter with both the top line and bottom line showing solid growth driven by recovery in the semiconductor industry and new product momentum. Both large and small customer categories depicted growth. New, mainstream and mature product categories all grew sequentially.
Altera is a leader in the Programmable Logic Devices (PLD) market, which is growing faster than the total semiconductor market. Altera’s main rival is Xilinx Inc. (XLNX). Together, they hold nearly 87% of the PLD market.
Altera is expected to announce third quarter results on October 19, 2010. The upgrade in guidance has impressed investors. Shares of Altera were up 4.14% and closed at $27.70 in after-hours trading.