The Zacks Analyst Blog Highlights: Altera, Intel, Xilinx, Taiwan Semiconductor Manufacturing and JetBlue Airways

Mar 01, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, March 1, 2013 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Altera Corp. (Nasdaq: ALTR), Intel Corp. (Nasdaq: INTC), Xilinx Inc. (Nasdaq: XLNX), Taiwan Semiconductor Manufacturing Company (NYSE: TSM) and JetBlue Airways (Nasdaq: JBLU).


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Here are highlights from Thursday's Analyst Blog:

Altera, Intel to Boost Next-Gen FPGAs


Bellwether fabless semiconductor company Altera Corp. (Nasdaq: ALTR) went a step ahead to focus on an advanced version of FPGA (Field-Programmable Gate Arrays) chips. For this transition into high-end high performance next-generation chips, Altera is collaborating with the chip giant Intel Corp. (Nasdaq: INTC).

So far, the chip maker has used its facilities for its own processors. Signing Altera as its first foundry customer will allow it to grow its foundry chip business and make a successful strategic shift in its business model.

According to the agreement, Intel will be making chips for Altera using its 14 nanometer (nm) trigate transistor technology. Altera is currently manufacturing its chips at the 45nm, 40nm and 28nm nodes. Intel's technology will help it to make a smooth transition to 14nm FPGA production. Altera remains on track to launch its 20nm FPGA product suites as planned.

Altera believes that the 14nm offerings will be suitable for high-performance systems used in military, wireline communications, cloud networking, and computing and storage applications.

An FPGA is a semiconductor programmable logic device (PLD) that can be programmed by the customers/original equipment manufacturers (OEM) after manufacturing. The flexible nature of the FPGA is preferred by many customers over the low-cost, fixed-function ASICs (application-specific integrated circuits).

Altera earns the largest share of its revenues from FPGA products. It is also evident that the company's revenue growth is led by its new products. Hence, we are positive on Altera's decision to shift to Intel-powered 14nm FPGA product suites as this would give its revenue stream a boost, going forward.

With the transition, Altera would be in a favorable position against its archrival Xilinx Inc. (Nasdaq: XLNX). The agreement between Altera and Intel requires Intel to consider Altera as the prime consumer of its 14 nm FPGAs. Hence, it will be difficult for Xilinx to adopt Intel's technology to match its rival's offerings.

In a separate development, Altera announced that it will be continuing its long-term relationship with its foundry partner Taiwan Semiconductor Manufacturing Company (NYSE: TSM), which will continue to work on developing advanced FPGA offerings. Currently, TSMC is working on Altera's yet-to-be announced 20 nm product suites.

Despite prospects in the FPGA space and a favorable position in the PLD market, some basic problems (longer sales cycle, volatility in the semiconductor market, a soft telecom market and declining margins) keep us concerned about Altera. The company delivered disappointing fourth quarter 2012 results with earnings per share (EPS) and revenues missing the Zacks Consensus Estimates. It also provided a soft first quarter 2013 outlook.

The association with Intel is not going to drive its near term results. Hence, Altera currently has a Zacks Rank #5 (Strong Sell).



JetBlue Makes Deal with Airbus


JetBlue Airways (Nasdaq: JBLU) has agreed to purchase 110 ship-sets of retrofit Sharklets from leading aircraft manufacturer – Airbus. Per the letter of intent signed between the two companies, the Sharklets will be utilized for the carrier's A320 aircraft that are in service. Although none of the companies disclosed the financial terms of the deal, deliveries are expected in 2014.

A week earlier, JetBlue displayed the first A320 aircraft that will be retrofitted with Sharklet wing tips. Designed with innovative and advanced technologies, these wing tip devices will enhance the aerodynamics of Airbus aircraft, thereby reducing fuel emissions by almost 4%.  

Sharklets will aid the JetBlue aircraft in adding an extra 100 nautical miles or boost the payload capability by up to 1,000 pounds. The New York based airline is the first carrier in North America to fly with Sharklets. The company will also possess the biggest A320 fleet with Sharklets in the world, once the deal is completed. All future aircraft delivered by Airbus to JetBlue will be equipped with the new feature.

A top executive at JetBlue stated that the company is hopeful that this development will help it to optimize its performance level and render better and efficient services.

Of late, JetBlue is concentrating on re-designing its fleet structure and making heavy investments to improve the standard of its aircraft. With the addition of novel and attractive features, the company aims to offer customers a unique flying experience.  

JetBlue has the youngest and most fuel-efficient fleet – consisting of 127 Airbus A320 aircraft and 53 EMBRAER 190 aircraft – among the other major U.S. airlines


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