Intel Corp last night affirmed its profit-margin target for 2008, reassuring investors concerned about falling memory chip prices and the impact of a weak US economy, sending its stock up 8 per cent.
The statement took some of the string out of the announcement by the world's largest maker of semiconductors of a fall in first-quarter net income to $1.44 billion, or 25 cents per share, from $1.64 billion, or 28 cents a share, a year ago. Revenue rose to $9.67 billion from $8.85 billion, slightly better than Wall Street expectations.
Intel employs just under 5,000 people at its factory in Leixlip.
With both Intel and smaller rival Advanced Micro Devices Inc issuing results warnings in the first quarter, fears had been mounting about PC sales with the US economy possibly in a recession. Intel's report went a long way toward easing those worries.
The earnings per share met Wall Street's average target, according to Reuters Estimates, but it was the profit margin outlook and revenue growth that boosted the stock.
Full-year gross margin guidance of 57 percent, plus or minus a few points, caught the eyes of many Intel watchers.
Intel had set the same margin target in January, then in March scaled back first-quarter margin expectations to 54 per cent, plus or minus a point, citing flash memory chip prices. The first-quarter margin ended up being 53.8 per cent.
The company, one of the big bellwethers for technology, said it expected second-quarter revenue in a range of $9.0 billion to $9.6 billion and a gross margin of 56 per cent, give or take a couple points.
Analysts' current expectations for the second quarter are for a profit of 28 cents per share, on average, on revenue of $9.26 billion, according to Reuters Estimates. The midpoint of Intel's revenue forecast - $9.3 billion - is slightly above consensus estimates.