Intel Corp’s fourth-quarter revenue blew past Wall Street forecasts and it gave a bullish margin outlook on higher prices and firm demand for server chips, reinforcing hopes for a strong recovery in technology.
Intel, whose stock extended gains after rising 2.5 percent in regular trading, said on Thursday its gross profit margin in the fourth quarter rose to a record 65 percent. While it forecast a drop to between 59 percent and 63 percent in the seasonally weaker current quarter, that still surpassed analysts’ average projection of 58.8 percent.
Some technology stocks rallied on the news. Intel chip rival Advanced Micro Devices Inc gained 1.6 percent, while Microsoft Corp climbed nearly 1 percent.
Many analysts predict a return of corporate spending in the second half of this year that would lift the tech sector out of its worst downturn in decades. Some say new spending has already begun.
“The big picture is that tech remains investable,” Wedbush Morgan’s Patrick Wang said. “They’re giving us reassurance that the PC sector remains intact and more importantly, that we’re seeing incremental improvements in the economy and that we’re probably well on our way to recovery. What they did on the gross margin line was extremely impressive, which was due to the massive upside in revenue.”
REVENUE ON THE RISE
Intel said average selling prices of its microprocessors rose from the third quarter, driving a 21 percent revenue increase in its data center business, which makes server chips, and a 10 percent revenue rise in its PC business.
Net income totaled US$2.3 billion, or US$0.40 a share, in the three months ended Dec. 26, beating expectations for US$0.30, Thomson Reuters I/B/E/S said.
That was many times larger than the net income of US$234 million, or US$0.40 share, in the same period of the previous year, when the company incurred a US$1.1 billion write-down mainly because of an investment in wireless service provider Clearwire Corp.
‘NICE JOB’
“They did a nice job on the topline, which exceeded our expectations. The gross margins were better than we had even expected,” Broadpoint AmTech analyst Doug Freedman said.
“Looking forward, we’re encouraged by the low capital spending and the projection that gross margin would continue to operate within a very tight range,” he said.
Revenue rose to US$10.6 billion from US$8.2 billion in the year-ago period, and above the Wall Street target of roughly US$10.2 billion.
Intel forecast current-quarter revenue of US$9.7 billion, plus or minus US$400 million.
The figure exceeds the US$9.3 billion average estimate of analysts polled by Thomson Reuters I/B/E/S.
Intel’s stock rose as much as 2.1 percent to US$21.94 after hours, before trading at US$21.63. It rose 2.5 percent to close at US$21.48 in regular NASDAQ trading.
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