Intel Quarter, Forecast Signals Upbeat ToneBy Reuters | Posted 2010-10-13 Email Print
Intel's upbeat forecast for its fourth quarter sales and margins has raised hope that the technology sector could end the year on a strong note.
(Reuters) - Intel Corp forecast upbeat fourth-quarter sales and margins as resilient demand from emerging markets and corporations offset weak consumer spending, raising hopes that the technology sector could end 2010 on a strong note.
Shares of Intel and rival Advanced Micro Devices Inc, which have warned about weak consumer demand for computers, climbed 1 percent in after-hours trade.
In Asia, shares of Hynix Semiconductor, the world's No. 2 memory chipmaker, rose 2.4 percent and Elpida Memory gained 2.3 percent as Intel improved the outlook for the latest tech earnings, which some have feared could spell a disappointing holiday shopping season.
After investors lowered their expectations for chip companies, semiconductor stocks surged through September in part on the belief that the worst might be over for the technology sector.
Intel's forecast for a better-than-expected December quarter gross margin of 67 percent -- plus or minus a couple percentage points -- affirmed hopes that higher-end spending on servers or data centers may help offset a loss of computer sales to a booming tablet segment.
And Chief Executive Paul Otellini told analysts on a conference call on Tuesday that early demand for Sandy Bridge -- its next-generation chip combining central processing and graphical functions -- was much greater than originally anticipated.
"Intel has set a high bar for tech earnings," said Canaccord Genuity analyst Bobby Burleson. "There was concern about Q4 ... and the number is better than the Street expected."
The world's largest chipmaker forecast revenue of $11.0 billion to $11.8 billion in the final three months of 2010, in line with analysts' expectations of $11.32 billion, according to Thomson Reuters I/B/E/S.
"We'll see the consumer market growing but likely a little less than you'd normally expect. I attribute that to consumers pulling back a little bit based on economic uncertainty," Intel Chief Financial Officer Stacy Smith told Reuters.