Intel Corp, the world's biggest semiconductor maker, said second-quarter sales will be US$6.6 billion to US$6.8 billion as demand for microprocessors reaches the high end of the company's expectations.
Santa Clara, California-based Intel, whose processors run about three-quarters of the world's personal computers, narrowed its sales forecast from the US$6.4 billion to US$7 billion range it gave last month.
That would be about 4 percent to 8 percent more than the revenue of US$6.32 billion in the same quarter last year.
Sales of processors used in PCs and servers are at the high end of what's normal for the quarter, chief financial officer Andy Bryant said on a conference call. The quarter has "unfolded pretty much as we expected" and there's nothing unusual, he said.
The comments helped allay concern that PC demand may have dwindled as the quarter has progressed, investors said.
"The good thing to come out of this call is that it's unlikely you'll see negative earnings revisions, not just for Intel but technology companies in general," said Robert Siewert, a chip analyst at Victory Capital Management, which manages US$65 billion and holds Intel shares. "That will put some investors' minds at ease."
The shares of Intel rose US$0.50 to US$22.34 after the call.
They earlier dropped as much as US$0.52 after the company's announcement.
The stock gained US$0.46 to US$21.84 as of 4pm New York time in NASDAQ Stock Market trading and is up 40 percent this year.
The company will earn US$0.13 a share on US$6.65 billion in sales, according to the average analyst estimates in a Thomson Financial survey. Intel reported net income of US$446 million, or US$0.07, in the year-earlier quarter.
Bryant stuck by a previous forecast that gross margin, or the share of sales left after paying manufacturing costs, will be about 50 percent, plus or minus 2 percentage points in the current quarter and 51 percent plus or minus "a few" percentage points for this year. Intel will report second-quarter results July 15, according to Bloomberg data.
Investors study Intel's business because it mirrors the strength or weakness of computer-related spending. Executives at Hewlett-Packard Co, the world's biggest PC maker, have said such expenditures are worsening in Europe. PC parts makers have lowered forecasts for the current quarter, sparking concern that companies will further delay upgrading their aging PCs.
Bryant said European sales continued to perform as the company envisioned in April, when it first delivered the current quarter's forecast, and possibly would deliver "a little bit of a pleasant surprise."
The comment that PC sales were at the high end of Intel expectations "gives me great confidence going forward," said Jim Grossman, who helps manage US$57.4 billion at Thrivent Financial and holds Intel shares.
Intel in April said it lost customers for flash memory, used to store data in mobile phones and other electronic devices, after raising prices by as much as 40 percent. Sales of flash memory since then are about where executives expected them to be, according to Bryant.
"It will take us a while to get customers back on board," he said.
Demand for chips used in communications devices such as network routers remains "weak," Bryant said on the call. The chipmaker is counting on communications chips to offset slowing growth for its processors over the next decade or so.
Its Intel Communications Group had a first-quarter operating loss of US$140 million on sales of US$503 million, as companies struggling with dwindling revenue scaled back purchases of networking gear. The loss last year was US$150 million on US$518 million in sales.
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