Intel Microprocessor Sales Better Than Expected

Despite the overall stability of its business, the company has yet to see any evidence of a broad economic recovery, said Andy Bryant, Intel's chief financial officer.

"What we're seeing right now is seasonality," he said Tuesday. "We are not seeing any kind of recovery yet."

For the three months ended March 30, Santa Clara, Calif.-based Intel earned $936 million, or 14 cents a share, compared with profits of $485 million, or 7 cents per share, in the same period last year.

The sharp increase was largely due to the adoption of new accounting rules regarding acquisitions.

Excluding one-time items, the chip maker earned $1 billion, or 15 cents a share, compared with $1.1 billion, or 16 cents a share, in the first quarter of last year.

First-quarter sales were $6.8 billion _ a 2 percent increase over last year's first-quarter revenues of $6.7 billion.

Analysts were expecting profits of 15 cents per share on revenues of $6.79 billion, according to a survey by Thomson Financial/First Call.

The results were released after the close of the markets Tuesday. In trading Wednesday, shares of Intel rose $1.13, or 3.8 percent, to close at $30.64 on the New York Stock Exchange.

The company took a $155 million charge related to the settlement of a long-running patent dispute with Intergraph The charge reduced first-quarter earnings by about a penny per share.

Excluding the effects of the settlement, Intel's growth margin would have been 53.6 percent, several percentage points higher than the company's earlier estimates. Including the settlement, it was 51.3 percent, or flat with the fourth quarter.

Bryant attributed the gain to increased average selling prices, better product mixes and improved factory efficiency.

"It looks like they'll be able to generate higher earnings on a lower revenue streams," said Eric Rothdeutsch, an analyst at Robertson Stephens.

Bryant said second-quarter revenues are expected be in the range of $6.4 billion to $7 billion, with gross margin of about 53 percent.

Like other semiconductor companies, Intel was hit hard by the tech downturn that popped the Internet bubble, crashed the telecom industry and led to a decline in personal computer sales.

Intel did not resort to massive layoffs and continued to pump billions of dollars into research and development. On April 2, the company unveiled a 2.4 gigahertz Pentium 4, its fastest yet.

Intel hopes to reap returns on new technologies that not only boost performance of its chips but also make the process more efficient and profitable.

"Intel's aggressive R and D and manufacturing investments paid off in the first quarter, helping our product mix and profitability in a generally soft environment," said Craig R. Barrett, Intel's chief executive.

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