UPDATE 3-Altera sees weak wireless market, shares slip

* Sees Q1 rev down 5-9 pct

* Q4 EPS $0.45 vs est $0.42

* Q4 rev $457.8 mln vs est $447.5 mln

* Shares fall 2 pct in after-mkt trade

By Sruthi Ramakrishnan

Jan 24 (Reuters) - Altera Corp forecast weak first-quarter revenue on soft demand in its biggest markets, underscoring concerns about a shaky rebound in the semiconductor industry.

The programmable chipmaker said it sees first-quarter revenue declining 5 percent to 9 percent sequentially on weakness in its wireless and military segments.

This implies revenue of $425.8 million at the midpoint, while the Street is expecting $455.5 million, according to Thomson Reuters I/B/E/S.

Chief Executive John Daane said he sees softness in the wireless markets in Europe, Japan and Asia.

"Wireless should also be down across multiple geographies, due to continued inventory depletion after market softening in the second half of 2011," Daane said on a conference call with analysts.

The company also said it is experiencing a downtick in its military business segment, which contributed 11 percent to sales in the fourth quarter.

"Orders are stabilizing towards the end of the quarter. That is constructive, but demand hasn't strengthened yet," ThinkEquity analyst Sujeeva De Silva told Reuters.

The disappointing outlook comes after rival Xilinx had raised hopes of an uptick in chip demand by projecting solid first-quarter results.

Xilinx and Altera are known for their programmable microchips which can be customized to perform a wide variety of computing tasks.

For the fourth quarter, the company posted earnings of 45 cents a share on revenue of $457.8 million. Analysts were expecting a profit of 42 cents per share on revenue of $447.5 million.

Shares of the company were down about 2 percent in extended trade, after closing at $40.12 on Tuesday on the Nasdaq.