Chipmaker Altera Corporation (ALTR) reported sales of $535.8 million in the first quarter of 2011, down 4% sequentially and down 33% year over year, but short of the Zacks Consensus Estimate of $537 million.
As anticipated by management, revenue from several of the company’s large telecom & wireless customers declined. Wireless was down significantly due to the end of the fourth round of TD-SCDMA deployment in China and weakness in India, partially offset by growth in WCDMA and LTE. Huawei represented 13% of revenues in the quarter. This decline was partially offset by strength in the automotive, industrial and military verticals.
New product sales increased 13% sequentially. Revenue from 40-nanometer devices increased 8% sequentially and represented 18% of revenues in the quarter. Revenue from 65-nanometer devices declined in the quarter.
Gross margin came in at 72.6%, up from 71.0% in the previous quarter and 71.4% in the year-ago quarter driven by favorable vertical mix. Operating margin came in at 45.8%, down from 47.4% in the previous quarter and down from 40.0% in the year-ago quarter.
Altera reported a net income of $224.1 million, $0.68 per diluted share in the first quarter of 2011 compared with a net income of $231.6 million, $0.72 per diluted share in the fourth quarter of 2010 and a net income of $153.2 million or $0.50 per diluted share in the first quarter of 2010. The reported easily beat the Zacks Consensus Estimate of $0.65.
During the quarter, Altera generated $297.0 million of cash from operations and used $6.5 million in capital expenditures. Altera ended the quarter with $3.1 billion in cash and short-term investments.
Going forward, Altera expects sales to be flat to up 5% in the second quarter. This implies a revenue guidance of $535.8 million–$562.6 million. Altera expects to continue to see significant 40-nanometer growth throughout FY11. In 2010, Altera focused on 28-nm development and will introduce more products in 28-nm than any previous process node in the coming years. We believe the company gained market share in 2010 vis-
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