Hopes for a Christmas miracle in the chip sector took a hit Thursday night, as both Altera (Nasdaq:ALTR) and Texas Instruments (NYSE:TXN) revised their fourth quarter guidance lower, on widespread chip weakness. If there's a silver lining to this cloud, it may be in that both companies are seeing similar trends and both believe that the current state of industry shipments is unsustainable. Although more than a few investors have already burned their fingers looking for a turnaround, the next quarter could be the bottom of the cycle and may be pointing towards a sharper rebound in 2012.
Altera Doubles Down
Altera had previously expected sequential revenue declines of 7 to 11% and analysts dutifully pegged their estimates at a 9% sequential decline. Now, though, in response to what management characterized as "widespread weakness," they are revising their expectations to a decline of 13 to 16%. Given that Altera's smaller competitor Lattice (Nasdaq:LSCC) also warned of worse-than-expected results, and guided for a similar 14 to 17% sequential decline, the idea of widespread weakness seems legitimate.
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