As wireless companies seem committed to never-ending capital spending and network upgrades, it would make sense that key suppliers to this market would be strong secular growth stories. Add a product/technology transition story to the mix and you have a pretty interesting growth story. That's the very short version of the buy thesis on chip company Altera (Nasdaq:ALTR) and while it's a compelling story, it is not without some risks and bumps in the road.
A Tough Third Quarter
Both Altera and rival Xilinx (Nasdaq:XLNX) told us all that this would be a bad quarter, but results at Altera were actually a little worse than expected. Revenue fell almost 1% from last year and almost 5% from the prior quarter, as telecom spending, which typically makes up close to half of Altera's revenue, dropped sharply and revenue fell almost 13% sequentially. The company's industrial business was not good either, down about 7%, and though the networking/computing segment was strong, up over 30%, it's relatively small.
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