Intel profit falls, beats the street
World's largest chipmaker reports sales fell 26% but says PC market bottomed in February. Shares fall after-hours on lack of revenue guidance.
NEW YORK (CNNMoney.com) -- Intel Corp. said Tuesday its first-quarter profit dropped 55% amid a weak market for personal computers, but the world's largest chipmaker topped Wall Street's forecasts for earnings and revenue.
The Santa Clara, Calif.-based company's net income totaled $647 million, or 11 cents per share, for the three months ended March 28, compared with $1.44 billion, or 25 cents per share, in the year-earlier period.
A consensus estimate of analysts polled by Thomson Financial had forecast a profit of 3 cents per share.
Sales fell 26% to $7.15 billion from $9.67 billion a year ago. Analysts were looking for $6.98 billion.
"Desktop computer sales hit bottom and have followed a more normal pattern since February," chief executive Paul Otellini said in a conference call.
Otellini noted the company's "horrendous" fourth quarter, when profit fell 90%.
"We're still in a fragile economic environment, but the past three months have improved our ability to look at the market now," he said. "It's given us the confidence to say we've seen the bottom."
He expects a gradual recovering of demand and replenishing of stores' inventories in the coming months.
Intel would not provide a formal outlook, but for internal purposes, the company predicted second-quarter revenue that will be flat compared with the first quarter.
Shares added 3 cents to close at $16.01 Tuesday, but fell 85 cents, or 5.3%, in after-hours trading.
"People were hoping for a blowout quarter, and it didn't happen," said David Wu, analyst at Global Crown Capital.
"There wasn't much chance to live up to the hype, and people were disappointed to see it wasn't a performance like Wells Fargo or Goldman Sachs," he added.
The company's internal prediction of flat revenue may also have punished the stock, said Trip Chowdhry, analyst at Global Equities Research.
Intel (INTC, Fortune 500) is a bellwether for the technology industry, as investors look to its results as a barometer of spending on personal computers and servers. When manufacturers buy more of Intel's computer chips, it suggests they expect higher consumer demand.
Like many chipmakers, Intel has suffered from slumping PC sales in the economic downturn. Big technology stocks have stabilized somewhat in the first quarter of 2009. The Dow is down about 10% and the tech-heavy Nasdaq Composite is down 3% since the beginning of the year, but Intel and IBM (IBM, Fortune 500) are the only two Dow components that are up year-to-date.
Intel and rival Advanced Micro Devices (AMD, Fortune 500) provide most of the chips for standard personal computers, while Samsung and Texas Instruments (TXN, Fortune 500) have most of the market share for mobile-phone processors. 
