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Moody's puts Altera on review for downgrade

NEW YORK (AP) -- Moody's Investors Service said Thursday that it has placed Altera Corp.'s A2 senior unsecured ratings on review for downgrade.

The rating agency made the move following the chipmaker's announcement Wednesday that it will buy back an additional 30 million shares. Combined with the board's previous buyback plans, it now has authorization to buy back up to 41.1 million shares. That's about 13 percent of its shares outstanding.

Moody's said that Altera is changing its financial policy and increasing its leverage to repurchase stock. As part of the review of its investment-grade rating, it will determine how much the company will raise its debt levels in order to buy back shares.

The rating agency said that based on Altera's strong market position, low capital intensity, relatively stable pricing, and diversified end markets, it expects a continuation of solid operating performance and cash flow generation over the next few years. However, a more aggressive financial philosophy than previously expected could hurt its rating.

Shares of the San Jose, Calif., company increased 98 cents, nearly 3 percent, by midafternoon Thursday.