Altera lowers 4Q expectations

Altera (Nasdaq: ALTR) doesn't expect to sell as much as it originally thought for the fourth quarter.

After market close Wednesday, two days after announcing a new CEO John Daane, the maker of programmable logic devices cut its fourth quarter revenue target to $395 million, or roughly flat sequential growth. During the company's last conference call with analysts, executives predicted sequential growth of 12 to 15 percent.

Daane starts Thursday at Altera.

Shares of Altera plunged to 18.75 in afterhours activity on the Island electronic communications network, following the revenue warning. Altera stock gained 0.03125 to 25.9375 in Wednesday's regular trading ahead of the announcement.

Some industry observers suspected Altera would see its fourth quarter sales slow, because many communications companies stocked up on equipment earlier this year. Lehman Bros. and Salomon Smith Barney downgraded Altera in October. Earlier this week, Lehman Bros. analyst Dan Niles issued another cautious report.

Altera executives on Wednesday confirmed those suspicions. The company reported lower-than-expected November resales worldwide, and North American resales below those in August.

"With the benefit of hindsight we believe we had customers participating in the DSL business that overbought in the first three quarters of the year, and are now pulling back," CFO Nathan Sarkisian said in a statement. "A more important factor, however, is the inventory accumulation at contract manufacturers. Now that our lead-times are short and product availability is good across our entire product portfolio, contract manufacturers are taking the opportunity to reduce their own inventories, resulting in reduced resales."

Chairman Rodney Smith apologized for the company's earnings miss. "The zero growth in the quarter indicates how quickly things have turned," he said.

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