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 the year 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 last month 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 Intel 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 [Wall] Street expected.”
The world’s largest chipmaker forecast revenue of US$11 billion to US$11.8 billion in the final three months of this year, in line with analysts’ expectations of US$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 reporters.
Analysts warned that not all semiconductor makers would do as well as Intel.
Linear Technology Corp, which makes products such as amplifiers and voltage regulators, said on Tuesday its total bookings fell sequentially in the quarter.
“PCs have been beaten up a lot so sentiment is low enough that it’s hard to disappoint,” said Patrick Wang, an analyst at Wedbush.
Shares of Intel rose to US$20 in extended trading after closing 1.07 percent higher at US$19.77 on NASDAQ.
Its third-quarter net profit was US$2.955 billion, or US$0.52 a share, versus US$1.86 billion in the year-ago quarter. That was slightly higher than the US$0.50 per share expected by analysts.
Revenue in the quarter ended Sept. 25 was US$11.1 billion, slightly above the US$10.99 billion expected.
Longer term, Wall Street remains concerned about the threat to Intel from the fast-growing tablet segment popularized by Apple’s iPad.
“Consumers will have a limited amount of discretionary income and some will choose to purchase a tablet instead of upgrading an existing PC or purchasing a netbook in any given period,” Otellini conceded on the conference call.
On top of soft US and European demand, the PC industry has faced rising inventories for chips and other components that have led some customers to reduce their orders for new parts.
Global semiconductor sales could grow just 5 percent next year as the economy continues to struggle, according to market research firm iSuppli.
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