Altera reaffirms Q2 guidance; expects stock options expenses

SAN FRANCISCO — Programmable logic supplier Altera Corp. Tuesday (May 30) reaffirmed previously given second quarter guidance and said that it expects to report "several million dollars" of expense related to the company's previously announced review of historical stock options granting practices.

In a previously scheduled update of second quarter guidance, Altera (San Jose, Calif.) said it expects second quarter sales to be in line with previous guidance of 7 to 10 percent sequential growth.

Altera reported first quarter revenue of $292.8 million, but has yet to file a first quarter 10-Q report with the U.S. Securities and Exchange Commission (SEC) pending completion of the review of historical stock options granting practices. Seven to 10 percent sequential growth would put the company's second quarter revenue in the range of $313.3 million to $322 million.

Sata Chillara, an analyst with American Technology Research, estimates Altera's second quarter revenue will be $318 million. In a report issued Tuesday, Chillara maintained a rating of "hold" on Altera's stock. "Based on our checks, we believe previous substrate delivery issues have eased, however we are cautious on the back-end capacity and gross margin improvement in 2H06 as we still hear of price increases from the test and assembly industry," the report read.

Altera said new products lead the company's growth with Stratix II, Cyclone II, MAX II and HardCopy devices all demonstrating strong sales increases. While supply of certain types of Stratix, Stratix II, and HardCopy devices remain tight, Altera said, the company believes that lead times for these parts will return to normal within one to three months, in line with previous company estimates.

Altera revealed last week that the SEC and the U.S. Attorney for the Northern District of California are looking into historical stock options granting practices at the company, and that it has been named as defendant in two shareholder lawsuits.

Altera is one of about 20 companies, many of which are in electronics, which are reportedly being investigated by the SEC in connection with historical stock options granting practices. Many of these companies are being investigated by the Department of Justice and some have acknowledged that they will have to restate some past earnings due to improper accounting of stock options. A number of electronics executives and directors have resigned or been terminated as a result of these investigations.

For comprehensive coverage of the ongoing stock option scandal, see the EE Times' archives page.