Altera, Xilinx stumble on Lehman comments

Programmable logic device stocks lost ground Monday after Lehman Brothers lowered its earnings estimates for leaders Altera and Xilinx.

Altera (Nasdaq: ALTR) shares fell $3.38, or 11 percent, to $27.81 while Xilinx (Nasdaq: XLNX) shed $8.25, or 15 percent, to $48.63.

Both stocks have been under considerable pressure in the past few months as telecommunications and network-equipment companies continue to cut back orders of the customized chips.

Lehman Brothers analyst Dan Niles said neither company is likely to meet their projected sales growth targets of 12 percent this quarter.

"We believe both Altera and Xilinx have seen slowing demand in November with a book-to-bill ratio below 1.0 and that both will see growth closer to the mid-single digits (or lower) in the first quarter of calendar 2001," Niles wrote in a research report.

Niles cut his earnings-per-share estimate for Altera to 31 cents a share from 32 cents a share in the fourth quarter and while slashing his fiscal 2001 estimate from Xilinx from $1.30 a share to $1.28.

Last quarter, Xilinx topped analysts' estimates when it posted a profit of $114.1 million, or 32 cents a share, on sales of $437.4 million.

First Call Corp. consensus expects the San Jose, Calif. company to earn 34 cents a share in its fourth quarter.

The stock moved up to a 52-week high of $98.31 in June after falling to a low of $38 in December.

Altera met analysts' estimates in its second quarter, earning $118 million, or 28 cents a share, on sales of $395.4 million.

Analysts are expecting a profit of 32 cents a share in its third quarter.

Altera shares peaked at $67.13 in August after falling to a low of $22.50 in December.