Altera Provides Business and Financial Update.

Business Editors/High-Tech Writers

SAN JOSE, Calif.--(BUSINESS WIRE)--June 27, 2001

Altera Corporation (Nasdaq:ALTR) today reaffirmed prior revenue guidance for the second quarter of 2001. The company also summarized certain actions it is taking to address current business conditions. The company said that it continues to expect second quarter revenues to be down approximately 25% from the first quarter. While the company continues to see signs of stability in North America, international business has remained soft.

"Despite these short-term cyclical challenges, our long term growth outlook remains strong," said John Daane, president and CEO of Altera. "As we continue to execute on our business strategy, the current business environment requires us to be cautious and make some pragmatic, yet difficult decisions."

The company plans to record a one-time excess inventory charge this quarter in the range of $115 million, pre-tax. Excluding this charge, gross margins are expected to remain above 64% in the second quarter, consistent with prior guidance. Additionally, the company plans to record an approximately $10 million charge in connection with specific steps it is taking to align its organization with current and projected revenues. Combined, the inventory and restructuring charges are $105 million on an after-tax basis.

The company is reducing its worldwide headcount by 152 people, approximately 7% of its current workforce, consolidating certain offices, and writing down various intangible assets. Altera has reduced executive officer pay 10% and postponed employee merit increases. As a result of these and other recently implemented actions, cost savings are estimated to be in the range of $6 million per quarter, beginning in the third quarter of 2001.

"In addition to implementing a wide variety of measures to reduce spending, the unfortunate and painful decision of headcount reduction had to be made," said Daane. "Our R&D commitment remains substantial and we will continue to deliver on our commitment of excellent customer support. We intend to extend the design win momentum we have seen in the past months and we are going full speed ahead with the introduction of new products. This strategy, we believe, will allow Altera to further establish its leadership position in the programmable logic market."

Altera will announce its complete second quarter results after the market close on July 23, 2001.

Conference Call

Altera will review these initiatives in a conference call today, June 27, 2001, at 2:30 PM Pacific Daylight Time. The call may be accessed by dialing 913/981-5553 and referencing Altera. The call may also be accessed at www.altera.com in the investor relations section. A webcast replay will be available later in the day. A telephonic replay of the call may also 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 call.

About Altera

Altera Corporation, The Programmable Solutions Company(R), was founded in 1983 and is a leading supplier of programmable logic devices (PLDs). Altera's CMOS-based PLDs are user-programmable semiconductor chips that enhance flexibility and reduce time-to-market for companies in the communications, computer peripheral, and industrial markets. By using high performance devices, software development tools, and sophisticated intellectual property cores, system-on-a-programmable-chip (SOPC) solutions can be created with embedded processors, memory, and other complex logic together on a single PLD. Altera common stock is traded on the Nasdaq Stock Market under the symbol ALTR. More information on Altera is available on the Internet at http://www.altera.com.

Forward-Looking Statements

Statements in this press release which 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" or words that imply or predict a future state such as "expects" or "intend". Investors are cautioned that all forward-looking statements in this release involve risks and uncertainty which can cause actual results to differ from those currently anticipated, due to a number of factors, including without limitation the risk that future performance is dependent on product development schedules, the design performance of software and other tools, customer business environment, market acceptance of the company's products, changing economic conditions, as well as the output of the normal quarter's end accounting processes and other risk factors discussed in documents filed by the company with the Securities and Exchange Commission from time to time.

Note to Editors: Altera, The Programmable Solutions Company and the stylized Altera logo are trademarks and/or service marks of Altera Corporation in the U.S. and other countries.