Altera Corporation (NASDAQ:ALTR) today announced third quarter 2007 sales of $315.8 million, down 1 percent from the second quarter of 2007 and down 7 percent from the third quarter of 2006. New products grew 13 percent sequentially.

Third quarter 2007 net income was $69.0 million, $0.20 per diluted share, compared with net income of $87.4 million, $0.24 per diluted share, in the third quarter of 2006.

Altera repurchased 10.8 million shares of its common stock during the quarter at a cost of $255 million. As of the end of the third quarter, Altera has, year to date, repurchased 32 million shares at a cost of $717 million. Repurchases in 2007 are part of a previously announced plan to repurchase up to $1.5 billion of the company’s common stock through 2007 and the first half of 2008. Altera ended the quarter with $1.2 billion in cash and investments.

Altera’s board of directors has declared a quarterly cash dividend of $0.04 per share payable on December 3, 2007 to shareholders of record on November 12, 2007.

“The September quarter proved more challenging than anticipated. Sales to the communications and industrial markets were below expectations, although consumer market segment sales were up strongly. The resulting end market mix reduced gross margin this quarter. Reflecting continued cost control efforts across the company, operating expenses came in lower than forecast, more than offsetting the lower than planned gross margin,” said John Daane, president, chief executive officer, and chairman of the board. “New product sales once again generated good double digit sequential growth and are now 35 percent of sales. With the Stratix® III FPGA family now shipping, we are the only programmable logic company with 65-nm devices optimized for low power, which gives us a unique competitive position at the leading edge of FPGA deployment. The Stratix III introduction is going smoothly, and we anticipate rapid customer adoption.”

Several recent accomplishments mark the company’s continuing progress:

• The first member of the 65-nm Stratix III family shipped in August, a month ahead of schedule. Available in software since November 2006, customers have been actively designing the Stratix III family into a broad range of applications including high performance computing, next generation wireless base stations, communications network infrastructure, and advanced imaging equipment. The Stratix III family delivers the lowest power consumption and highest performance of any high-end programmable logic device, with 45 percent lower power consumption and a 25 percent performance advantage over competing solutions. To dramatically lower power while delivering high performance, Stratix III FPGAs feature Altera’s innovative Programmable Power Technology. This power management technology enables every programmable logic array, digital signal processing and memory block to operate independently at high-speed or low-power mode.
• With the release of Quartus® II software version 7.2, Altera continues to extend its advantage in compile times, a key productivity metric. This new Quartus development software enables Stratix III FPGAs to achieve 300 percent faster compile times compared to competing high-end 65-nm devices. Electronic system designers, faced with aggressive time-to-market goals and increasingly concerned about designer productivity, can immediately benefit from the many other new features built into this latest Quartus version that further reduce development time. Beyond ease of use, performance remains critical. The enhanced Quartus version 7.2 place-and-route algorithms enable Stratix III FPGAs to produce a two speed grade Altera advantage versus competitors, giving customers yet another reason to choose Altera.

Business Outlook for the Fourth Quarter 2007

Sequential Sales Growth                      Flat to down 4%

Gross Margin                                 63% to 64%

Research and Development                     approximately $73 million

SG&A                                         approximately $67 million

Other Income                                 approximately $12 million

Tax Rate                                     13% to 15%

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 2007. A web cast and subsequent replay will be available in the investor relations section of the company's web site at http://www.altera.com. 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, 2007.

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 as well as comments relating to new products and share repurchase plans. 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, product introduction schedules, the rate of growth of the company's new products including the Arria™ GX, Cyclone® II, Cyclone III, Stratix II, Stratix III, Stratix II GX, MAX® II and HardCopy® device families, changes in the mix of our business between prototyping and production-based demand, the continuance of suitable financial market conditions, 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.

About Altera

Altera’s programmable solutions enable system and semiconductor companies to rapidly and cost-effectively innovate, differentiate and win in their markets. Find out more at www.altera.com.

Altera, The Programmable Solutions Company, the stylized Altera logo, specific device designations and all other words that are identified as trademarks and/or service marks are, unless noted otherwise, the trademarks and service marks of Altera Corporation in the U.S. and other countries. All other product or service names are the property of their respective holder.

Contacts:

Altera Corporation
Scott Wylie, 408-544-6996 (Investors)
Vice President – Investor Relations
swylie@altera.com
Anna Del Rosario, 408-544-6397 (Media)
Director – Corporate Communications
anna.delrosario@altera.com