The move follows an internal review by Altera's management of stock option practices and "related accounting." The disclosure casts a new and bigger shadow over the lack of corporate governance and questionable business practices in the industry.

In a statement issued Monday, Altera said the special committee would be assisted by independent legal counsel and outside accounting experts. Altera said it initiated the review following recent media reports about stock option practices at other companies. Semiconductor suppliers Vitesse Semiconductor Corp. and Power Integrations Inc. have recently undergone management shakeups related to internal investigations of stock options granting practices. Chip-equipment vendor Brooks Automation Inc. is also reviewing its past stock option grants.

"Although the impact to the company's historical financial statements is not yet known, the company does not expect the review to result in material changes to its historical revenues or non-option related operating expenses," the statement said.

Altera said it does not expect the review to result in "material changes" to it previously reported revenues or non-option-related operating expenses. Altera said it would miss a May 10 deadline for filing its quarterly financial report for the first quarter of 2006 with the U.S. Securities and Exchange Commission on account of the review.

A number of companies have been reviewing stock option granting procedures recently in the wake of a March 18 article in the Wall Street Journal that questioned whether some companies had been "backdating" stock option grants to result in their issuance at the best possible time. The Journal's analysis found a disproportionate number of cases where the companies examined had issued stock options to employees just before a sharp rise in the company's stock. The more a stock rises following the issuance of a stock option, the greater the profit to the option holder.

Last month, Vitesse suspended three executives, including CEO Louis Tomasetta and Chief Financial Officer Yatin Mody, pending an investigation into stock option grants. Vitesse later said its previously reported financial statements for the three months ended December 31, 2005, and possibly even further back, should not be relied on. The company added that its internal investigation has raised questions about the integrity of documents related to stock option grants.

Last week, analog semiconductor supplier Power Integrations announced the abrupt resignations of its chairman and its chief financial officer and said it would delay its quarterly SEC filing pending the completion of its internal investigation into its stock option granting practices. Power Integrations did not give reasons for the executives' resignations, but the resignations are believed to be related to the stock option inquiry.

Last month, fab-automation equipment specialist Brooks Automation announced that its board created a special committee comprised of independent directors to conduct an internal review of matters related to past stock option grants, including the timing of such grants and associated documentation. The special committee is being assisted by independent legal counsel and advisors.

In a recent report, the Wall Street Journal questioned the timing of stock options granted to former CEO Robert Therrien and two other Brooks officials.

And, contract design and manufacturing group Jabil Ciruit Inc. said last week that the SEC has contacted it about stock options granting practices. The St. Petersburg, Fla. company said it "has conducted an internal investigation of its stock option grant practices and found no issues of backdating or improper actions."