STOCKREPORTS

Altera Corporation

Nasdaq Symbol ALTR In S&P MidCap 400

Recent Price 57.13 52 Wk Range 57.13 - 19.44

Yield Nil 12-Mo. P/E 41.7

Quantitative Evaluation: Outlook (1 Lowest - 5 Highest) 2 Fair Value 51.50 Risk HIGH Earn/Div Rank B
Technical Evaluation: BULLISH since 09/96 Rel. Strength Rank (1 Lowest - 99 Highest) 80 Insider Activity Neutral

Overview 15-APR-97

Due to better than expected first quarter results and favorable business conditions, we have raised our 1997 revenues and EPS projections for Altera. The company has indicated that booking patterns are so strong that it is turning away orders from customers to guard against another build-up of excess inventories which hurt results in the second half of 1996. Revenues should gain about 30% in 1997, as significant design wins in recent years will translate into higher sales. Demand for the company's complex programmable logic devices (CPLDs) will be especially brisk for communication and computer applications. Despite late 1996 price cuts in the Flex 10K, Flex 8000 and Max 9000 families of CPLDs, the company has achieved its targeted goal of 62% gross margins, which we feel it will be able to maintain for the remainder of the year. The higher volume should allow ALTR to leverage operating and interest expenses, which will lift operating margins. We are projecting EPS (primary) of $1.65 for 1997. The shares were split two for one in January 1997.

Valuation 15-APR-97

Despite our second 1997 EPS estimate increase in as many quarters, we are maintaining our hold recommendation on the shares. We think that the stock is fairly valued at the current level of 28X our 1997 EPS estimate, and expect significant near-term gains to be difficult, in light of the sharp rally in the shares since July 1996. However, ALTR remains a good long-term holding for aggressive investors. The market for CPLDs, although cyclical, is expected to grow rapidly through the end of the decade. ALTR should be able to maintain its position as an industry leader for these rapidly growing devices. Geographic and end market diversity may lessen the negative impact of any future downturn in a specific region or user application.

Key Stock Statistics

Fiscal Year Ending Dec. 31

Business Summary 15-APR-97

Altera (ALTR) is a world leader in one of the semiconductor industry's fastest growing segments: high density programmable logic devices (PLDs) and associated software for logic development. This growth is being driven by competitive advantages provided by Altera's products to electronic system manufacturers, including improved performance and lower production costs, and the ability to get end-products to market faster.

The company's PLDs are standard products, that is, they are shipped blank for programming by the user. They are programmed at the customer's PC or workstation through the use of ALTR's proprietary software. Since ALTR's chips are programmed at a desktop, and not at a foundry, a product's time to market is dramatically shortened. In addition, since ALTR's integrated circuits are standard products, inventory risks for both the company and its customers are minimized.

ALTR seeks to induce system designers to incorporate its PLDs into the early stage of their design cycles. Such "design wins" can lead to use of the companyís PLDs in prototyping and, ultimately, in volume production of the customer's products, potentially for the life cycle of the product. In addition, system designers who have become familiar with the company's PLDs may be more inclined to use them in future designs, potentially resulting in additional sales for the company. As part of its strategy to achieve design wins, ALTR offers its development software systems at relatively modest prices.

ALTR is a "fabless" semiconductor company. It does not operate its own production facilities, but obtains its silicon chips through supply arrangements with leading semiconductor manufacturers. This allows the company to concentrate its resources on the design process and avoids the capital commitment and overhead burden associated with owning a fabrication facility.

Primary applications for the company's PLDs include communications, computer, and industrial, which accounted for 58%, 19% and 14% of 1996 revenues, respectively. International sales are significant, accounting for 49% of the 1996 total. ALTR has the second highest market share for PLDs, trailing only Silicon Valley arch-rival Xilinx, Inc.

Capitalization

Long Term Debt: $230,000,000 of sub. debs. due 2002, conv. into com. at $51.17 a sh. (3/97).

Curr. Ratio	2.7	3.0	3.2	3.8	4.5	3.5	3.7	5.2	4.6	2.4
% LT Debt of Cap.	38.3	53.2	Nil	Nil	Nil	Nil	Nil	Nil	Nil	14.9
% Net Inc.of Revs.	21.9	21.7	7.3	15.1	11.4	16.7	17.1	18.3	18.7	5.8
% Ret. on Assets	14.6	18.7	7.7	15.6	10.6	19.9	20.3	21.2	21.8	6.1
% Ret. on Equity	34.9	42.1	10.2	19.4	12.9	24.8	24.6	27.2	29.0	9.6

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--2610 Orchard Pkwy., San Jose, CA 95134-2020. Tel--(408) 894-7000. Chrmn, Pres & CEO--R. Smith. VP-Fin & CFO--N. Sarkisian. VP & Investor Contact--Thomas J. Nicoletti. Secy--C. W. Bergere. Dirs--M. A. Ellison, P. Newhagen, R. W. Reed, R. Smith, W. Terry. Transfer Agent & Registrar--Boston EquiServe L.P. Incorporated--in California in 1984. Empl-- 918. S&P Analyst: Stephen T. Madonna, CFA

This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997