Intel Corp, the world's biggest chipmaker, said first-quarter sales will be in line with forecasts, as personal-computer demand drops after a pickup during the holiday sales season.
Revenue will be US$6.6 billion to US$6.9 billion, compared with the US$6.4 billion to US$7 billion range Intel gave in January. Chief Financial Officer Andy Bryant said computer-chip demand is following a normal pattern for this time of year, and an economic recovery hasn't started yet.
Sales of chips that run wireless devices and networking gear are still weak, Bryant said on a conference call. Intel's revenue inched up in the fourth quarter after a yearlong slump as consumers bought more PCs and its most expensive Pentium 4 chips were in short supply. Some investors were watching the report for signs of a broader computer-industry recovery.
"The bulls were hoping for more," said Scott Vergin, who manages about US$4 billion at Intel shareholder Lutheran Brotherhood Inc. "People thought they might move the range up to the high end. This leaves things right where they were."
Gross margin, or the percentage of sales left after subtracting manufacturing costs, will be slightly higher than the midpoint of an earlier range, the company said. Intel had predicted a margin of 50 percent, plus or minus a couple of percentage points.
Analysts expect the Santa Clara, California-based company to earn US$0.14 a share, excluding certain costs, on sales of US$6.77 billion, the average estimates in a Thomson Financial/First Call poll. Net income in the year-earlier period was US$485 million, or US$0.07 a share, on US$6.68 billion in sales.
Bryant said sales of Xeon chips for server computers that run Web sites have been a "little bit" stronger than forecast, with Pentium 4 revenue in line with targets.
"Intel's business is performing pretty much as we expected," he said. "There are very small pluses or minuses in various parts of the business."
Demand hasn't picked up for communications chips, networking-equipment processors and flash memory that stores data when cell phones are shut off, Bryant said. The communications business has been slumping for a year.
"There's a lot of capacity out there, and capital spending could be down maybe 30 percent this year," said Jack Geraghty, a Gerard Klauer Mattison & Co analyst who rates Intel a "buy."
The semiconductor industry posted its worst sales decline in history last year. Intel and rival Advanced Micro Devices Inc had stronger-than-forecast revenue in the fourth quarter as consumers snapped up PCs late in the year, leading investors to speculate that a rebound was imminent.
While it's too soon to call an end to the slump, there are some early signs that demand is rising again, investors said.
National Semiconductor Corp said yesterday orders have improved in recent months. The company, whose chips are used in cellular phones and PCs, expects sales to increase 6 percent to 9 percent in the quarter ending in May from the period that just ended.
The corporate market may not be on the rebound yet. Database-software maker Oracle Corp on Friday said sales and profit missed forecasts in the quarter ended last week. Yesterday, Sun Microsystems Inc Chief Financial Officer Mike Lehman said the computer maker's orders this quarter haven't been as steady as they were in the period ended in December.
Sun, whose server computers power corporate networks, reiterated that fiscal third-quarter sales will rise "slightly" from the second quarter's.
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