Intel results beat forecasts

Intel Corp's quarterly outlook and results soared past expectations, sending shares 7 per cent higher and fueling optimism over a tech sector recovery before the crucial holiday season.

Intel's rosier than expected forecast and comments about recovering demand for personal computers cheered markets and helped lift shares in tech heavyweights from Dell to Hewlett-Packard.

Intel Chief Financial Officer Stacy Smith said in an interview the technology sector was leading the way out of the economic downturn as demand for PCs rebounded.

Results from the world's largest chipmakers bolstered hopes of a sector-wide recovery. Global chip sales posted their sixth consecutive monthly increase in August, and analysts forecast September chip sales will likely rose more than 6 per cent from August.
They cited chip orders ahead of the holidays as well as the upcoming release of Microsoft Corp's Windows 7 operating system as sales drivers.

"What it says is we're on the mend, it's a rebound," said ITIC analyst Laura DiDio. "This is jump-starting momentum, so the outlook for 2010 is very good." Chief Executive Paul Otellini told analysts on a conference call that demand in the third quarter was consumer driven and that back-to-school sales exceeded expectations.

Otellini, whose company's "Intel Inside" stickers grace eight of every 10 PCs, said inventory remained below normal. FTN Equity Capital Markets analyst Joanne Feeney said Intel's results will likely boost the market.

"That will reassure people that we're not running into another situation where we have another inventory problem," she said.

Intel executives said their factories are running at 80 per cent to 90 per cent of capacity in the current quarter.