Intel shares were higher in early trade today, buoyed by its announcement yesterday that third-quarter sales will be largely in line with earlier forecasts - a far more upbeat assessment than investors were expecting.
At 4 p.m. Intel shares were trading up 56 cents at $26.66. The Dow Jones was down 98.53 points at 9.742.31, the S&P 500 was down 6.03 points at 1,100.37 and the Nasdaq composite was up 5.45 points at 1,711.09.
Yesterday, Intel said business in July and August was much better than expected, although September results will still be crucial in determining whether it would hit its financial targets.
Chief financial officer Mr Andy Bryant told analysts in a conference call that demand for the company's flagship Pentium 4 processor and 845 chipsets is "solid".
The company said that sales for the three months to September would come in at the lower end of the $6.2-6.8 billion estimate it gave earlier this year.
Goldman Sachs analysts said the news was "remarkably good, especially in the context of the horrendous investor sentiment recently".
ABN Amro analyst Mr Paul Lemming said Intel's update suggests that the semiconductor industry is reaching a bottom in inventory reduction although final demand remains weak.
In a note entitled "Dawn is breaking - but clouds remain," Lemming argued that there is still almost no visibility on how strong the market will be in 2002.
ABN Amro is expecting just 7 per cent unit growth in the PC market next year, which will not be sufficient to offset price declines in microprocessors.
Taking into account Ericsson's gloomy outlook for the handset business, lower capital spending in the telecom industry and the poor economic outlook for the US, Europe, Japan and Asia, "we believe it is extremely difficult to come up with a robust outlook for IT spending in 2002," said Mr Lemming.
AFP