On Wednesday April 16, Altera, the second largest maker of programmable logic devices (PLD) reported Q1 2008 results which were better than expected. The PLD industry is a duopoly controlled by Altera and Xilinx. Xilinx reports next week on Wednesday.

Over the next few weeks I’ll be providing a lot of information on the PLD industry and why it is a great investment opportunity. Here is a brief overview of Altera’s results. Revenue and free cash flow were both very good. The next quarter should be good based on a solid book-to-bill, good guidance, growth from new products, and continued progress from the company’s cost structure optimization driven by the new CFO. With PLD’s good market position and Altera’s solid product lineup leading to accelerating design wins Altera is in a great position over the next several years.

Financial Numbers

• Revenue = $336.1M up 10%, up 4% Q/Q
• Net Income = $83.9M vs. $65.5 Q/Q
• EPS = $.27 vs. $.20 Q/Q
• Cash Flow from Operating Activities = $149.7M

Financial Highlights

• Book to Bill > 1
• Repurchased = 15.5M shares for $275M, over past 15 mo’s repurchased $1.5B in stock, average price = $20.44
• Increased dividend to $.05/ share, from $.04/share
• Cash = $995M / LT Debt = $350M
• CapEx = $3.7M
• TTM ROE = 26%
• Inventory (Month’s Supply on Hand): Altera = 1.8, Distribution = 1.2

Operational Highlights

• Altera’s Stratix® III FPGAs awarded International Engineering Consortium’s (IEC) DesignVision Award in semiconductor & IC category for high performance and low power high-end FPGAs
• Arria™ GX transceiver-based FPGA family received
  • Annual “Product of the Year” award for best value high-performance FPGA from EN-Genius Network
  • Named to EDN magazine’s “Hot 100 Products” list in digital and programmable ICs category
• Zero-power MAX® IIZ CPLDs received
  • 2008 Editor’s Choice Award by Portable Design magazine in programmable logic category
  • Product of the Year Award from Electronic Products China

Guidance Q2 2008

• Sequential Sales Growth = 1 – 4%
• Gross Margin = 65% (+/- .5%)
• R&D = $65 – 67M, SG&A = $63 – 65M, Other Income = $3M, Tax Rate = 16 – 17%
• Diluted Share Count = 305 – 310M