INTEL CORPORATION 
By 
By Gabriel Madway
The world's largest maker of microprocessors, the brains of personal computers, had sent shivers through the technology sector by issuing two revenue warnings in the past three months as chip sales slid with companies and consumers cutting back on spending in a recession.
Investors had feared that Intel would slash revenue expectations for the first quarter. Instead, Intel said it was not providing an outlook, but "for internal purposes, the company is currently planning for revenue in the vicinity of $7 billion".
That was toward the low end, but did not miss entirely, the range of analysts' forecasts of $6.56 billion to $7.8 billion for first quarter revenue. The average estimate was $7.2 billion, according to Reuters Estimates.
"People were expecting very, very ugly numbers. Intel delivered mixed numbers, slightly better than the bears expected," said Patrick Yang, an analyst with Wedbush Morgan.
Intel shares were up about 4 percent in after-hours trading on Thursday, after having lost about 10 percent since it warned on January 7 that first quarter revenue would miss expectations.
Intel warned that gross margins will slip into the low 40s percentage in the first quarter because of start-up costs and charges related to under-utilized equipment.
"They were playing it cautious by not officially providing guidance," said Edwin Mok, analyst at Needham. "The big surprise was gross margins, which they guided for the low 40s. I'm concerned that the company is not letting up on its start-up investments in the face of the economic slowdown."
The company said in a conference call with analysts on Thursday that it expects its gross margin back up into a "healthy" range by the second half of 2009.
Some analysts feared Intel's share rally will be short lived with chip sales sliding as PC makers and other technology manufacturers trim inventory and cut back on purchases amid a slowing global economy.
Intel rival Advanced Micro Devices Inc
IN GOOD STEAD
The technology bellwether reported fourth-quarter results that were in line with lowered analyst estimates following a revenue warning last week, its second for the December quarter.
Net income for the fourth quarter ended December 27 fell to $234 million, or 4 cents a share, from $2.27 billion, or 38 cents a share, last year, Intel said. That matched Wall Street's forecast of 4 cents, according to Reuters Estimates.
Revenue fell to $8.2 billion from $10.7 billion last year.
"We have a very strong balance sheet, we have $14 billion in cash and investment, and our business model generates cash even in these weaker legs of the economic cycle," Chief Financial Officer Stacy Smith told Reuters. "That really holds us in good stead as we go into a weaker demand time."
Intel is the world's biggest maker of central processing units (CPUs) and its revenue warnings have touched off alarm bells across the technology sector. The company is component of the Dow Jones industrial average.
"It definitely doesn't provide comfort, but the thing to keep in mind is: this is a very cyclical industry, and it's seen its fair share of downturns and upturns," Morningstar analyst Andy Ng said.
Intel shares rose to $13.85 from their close on the Nasdaq of $13.29.
(Additional reporting by Sue Zeidler, Robert MacMillan and David Lawsky; Writing by Edwin Chan; editing by Richard Chang, Tiffany Wu and Carol Bishopric)
