Programmable logic supplier Altera Corp. reported revenue for the third quarter rose 1%, as expected, over the second quarter to $180.1 million, with growth of new products offsetting the decline of older PLD lines, and strength in non-traditional markets balancing out a weakness in telecommunications.
Net income for the quarter, which ended Sept. 30, was $23.4 million, or 6 cents per diluted share, essentially flat with the second quarter's $21.7 million, or 6 cents per diluted share. Third-quarter gross margin was 63.8% of sales, including profits related to the sale of previously written-off inventory. Excluding this benefit, gross margin was 60.8%.
Revenue from new products grew 18% in the second quarter, and new products now represent 30% of Altera's total revenue. With product families such as Excalibur and Cyclone reaching into diverse markets, overall revenue has become more balanced among communications (44%), industrial/automotive (27%), computers/storage (13%), and digital consumer (16%), said John Daane, president and chief executive of the San Jose company.
In the current weak market, "new product revenue growth speaks to Altera's market momentum and differentiated product line," Daane said in a conference call discussing the company's second-quarter results.
Stratix, Altera's most advanced product line, is ramping faster in revenue than any product in the company's history, Daane said, adding that -- despite continuing sluggishness in end-markets -- Altera still expects Stratix to hit the $150 million revenue mark next year.
For the fourth quarter, Altera anticipates revenue to be flat with the third quarter, give or take 2%, with gross margin in the range of 61% to 64%.
Last week, rival Xilinx Inc. also projected flat revenue for the December quarter, after posting a 4% sequential revenue decline in its fiscal second quarter, to $278 million