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SAN FRANCISCO, Jan 13 (Reuters) – Intel Corp (NASDAQ:INTC) posted
better-than expected revenue and margins for the fourth quarter
and gave a rosy outlook for early 2011, defying worries about the
chipmaker’s minor role in the booming smartphone and tablet
computer market.

Shares in the world’s largest chipmaker, whose net profit
surged 48 percent year on year, gained 2.4 percent, driven by
hopes for strong sales of its Sandy Bridge microprocessors, its
newest and most advanced line.

Intel is the first major technology company to report its
fourth-quarter results and its upbeat numbers set a positive tone
for the rest of the sector. Shares of companies like Dell (NASDAQ:DELL)
and Microsoft (NASDAQ:MSFT) moved up in after-hours trade.

"The expectation was there might be a miss. There is a lot of
concern over smartphones and tablets, but that will take a
backseat in the meantime," said Mahesh Sanganeria, an analyst at
RBC Capital Markets.

Despite an apparent early success with Sandy Bridge, Intel
faces sluggish personal computer sales and a major challenge from
the exploding popularity of mobile devices, a market dominated by
Britain’s ARM Holdings (L:ARM)(NASDAQ:ARMH).

Intel’s processors are the brains in 80 percent of the world’s
PCs but the company has yet to make its mark in mobile gadgets
that people increasingly depend on to surf the Web and update
their social networking profiles.

"Right now there’s just a larger overhang over the stock when
it comes to tablets and smartphones. That may be an area where
investors are more cautious," said Patrick Wang, an analyst at
Wedbush Securities.

But for the shorter term, many investors are betting on a bump
in revenue growth from the chip giant’s newest product line,
considered one of its most important advances in computer
processing power. Intel unveiled its Sandy Bridge microchip last
week.

"It seems to be getting widespread acceptance from the
customers. Even with the consumer market being a little bit weak
we expect it to ramp sales nicely in Q1," Chief Financial Officer
Stacy Smith told Reuters.