Altera Announces Third Quarter Results

SAN JOSE, Calif.—(BUSINESS WIRE)—November 6, 2006— Altera Corporation (NASDAQ: ALTR) today announced third quarter 2006 sales of $341.2 million, up 2 percent from the second quarter of 2006 and 17 percent from the third quarter of 2005. New product sales increased 26 percent sequentially and were up 142 percent from the prior year's third quarter.

Third quarter 2006 net income, on a generally accepted accounting principles (GAAP) basis, was $87.4 million, $0.24 per diluted share, compared with net income of $77.8 million, $0.21 per diluted share, in the third quarter of 2005. Non-GAAP net income, excluding the effects of stock-based compensation expense, was $97.8 million, $0.27 per diluted share, in the third quarter of 2006.

As previously announced, Altera temporarily suspended its stock repurchase program in May 2006. As a consequence, the company did not repurchase shares during the third quarter. Altera ended the quarter with $1.6 billion in cash and investments.

"Healthy new product growth in the third quarter continues to demonstrate the appeal of our leading edge devices. All of the products in this category, including the HardCopy(R) device family, grew sequentially and set new sales records," said John Daane, president, chief executive officer, and chairman of the board. "Altera's new product success over the past several years rests on unique programmable logic innovation that increases the attractiveness of our solutions and continues to add to our competitive strength."

Several recent accomplishments mark the company's continuing progress:
--   Earlier in the quarter, Altera received the Excellent Supplier
      Award from Huawei Technologies Co., Ltd. This award recognizes
      Altera's technology, product quality and responsiveness. The
      award is the highest form of recognition provided by Huawei to
      any programmable logic supplier in 2005. Altera supplies a broad
      range of products to Huawei, including Altera's unique HardCopy
      structured ASIC solution for Huawei's fixed network and
      transmission products. Customers across all of Altera's markets
      are, like Huawei, increasingly utilizing the seamless migration
      from an Altera(R) FPGA-based prototype to a low-cost low-power
      HardCopy device for production. Altera is the only company to
      offer both high-end FPGAs and a structured ASIC for volume

     In recognizing Altera, Huawei also noted Altera's overall quality
      and supply chain management. Delivering high levels of customer
      responsiveness is a key element in Altera's customer-centered
      business strategy and a significant contributor to Altera's FPGA
      market share gains over the past several years.

--   The MAX(R) II CPLD family, with a unique Altera architecture that
      delivers lower cost and power compared to traditional CPLDs,
      continues to open up opportunities for Altera programmable
      logic. Toshiba Corporation recently selected a lead-free MAX II
      CPLD for its newest line of gigabeat portable media players. The
      MAX II family provided Toshiba not just lower power and cost,
      but reduced development time so that Toshiba could offer the
      first digital audio/video player supporting Japan's one-segment
      TV and radio broadcasting services. "OneSeg" broadcasting allows
      users to view digital terrestrial video on a cell phone or other
      portable devices. For portable applications like the gigabeat
      media player, MAX II devices provide highly desirable
      flexibility and a low total solution cost compared to many
      traditional ASICS, ASSPs and discrete devices. While
      programmable logic has traditionally played a limited role in
      battery-powered systems, new products, like the MAX II family
      with its lower power and cost, are driving Altera into
      applications like the gigabeat media player, previously beyond
      the reach of a programmable solution.

Business Outlook for the Fourth Quarter 2006

Altera provides guidance on both a GAAP and a non-GAAP basis, excluding stock-based compensation expenses. Inclusion of stock-based compensation charges in GAAP-based operating expense adds significantly to the volatility of actual versus expected expense due to volatility in our stock price, which we cannot predict. Additionally, these forecasts assume that the impact of the company's non-qualified deferred compensation plan will be nil.
                                        GAAP               Non-GAAP
                                  ----------------      --------------

Sequential Sales                  decline of
                                  2% to 5%                    -

Gross Margin                      65% to 67%                  -

Research and Development          $61 million           $55 million

SG&A                              $76 million           $68 million

Other Income                      $16 million                 -

Tax Rate                          15%                   17%

Conference Call and Quarterly Update:

A conference call will be held today at 2:00 p.m. Pacific Time to discuss the quarter's results and management's outlook for the fourth quarter of 2006. The web cast and subsequent replay will be available in the investor relations section of the company's web site at A telephonic replay of the call may be accessed later in the day by calling (719) 457-0820 and referencing confirmation code 258712. The telephonic replay will be available for two weeks following the live call.

Altera's fourth quarter business update will be issued in a press release available after the market close on December 5.

Forward-Looking Statements

Statements in this press release that are not historical are "forward-looking statements" as the term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally written in the future tense and/or preceded by words such as "will," "expects," "anticipates," or other words that imply or predict a future state. Forward-looking statements include any projection of revenue, gross margin, expense or other financial items discussed in the Business Outlook section of this press release and comments relating to new products. Investors are cautioned that all forward-looking statements in this release involve risks and uncertainty that can cause actual results to differ from those currently anticipated, due to a number of factors, including without limitation, customer business environment, market acceptance of the company's products, the rate of growth of the company's new products including the Stratix(R) II, Stratix II GX, Cyclone(R) II, MAX II and HardCopy device families, changes in the mix of our business between prototyping and production-based demand, as well as changes in economic conditions and other risk factors discussed in documents filed by the company with the Securities and Exchange Commission from time to time. Copies of Altera's SEC filings are posted on the company's web site and are available from the company without charge. Forward-looking statements are made as of the date of this release, and, except as required by law, the company does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances.

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