Chips are up for Intel as profits lift shares

CHIPMAKER Intel yesterday posted soaring fourth quarter profits, boosting hopes that the recovery in the technology sector is underway.

The world’s largest computer chip company said sales had picked up strongly in the past three months, with revenues rising 29 per cent to $10.6bn (£6.5bn), beating analyst expectations of $10.2bn.

Shares in the group rose two per cent in after-hours trading yesterday as investors took heart from Intel’s results that the technology spending is on the upturn. The group is seen as a bellwether for business and consumer demand in the US economy.

Intel chief executive Paul Otellini also said the company had managed to generate ‘unprecedented operating efficiencies’ in 2009. “Our ability to weather this business cycle demonstrates that microprocessors are indispensable in our modern world,” he said.

The sales boost helped Intel post net income of $2.3bn in the three months to 26 December, up from $234m in the same period last year.

“They did a nice job on the topline which exceeded our expectations. The gross margins were better than we had even expected,” said Broadpoint AmTech analyst Doug Freedman.

Intel said its gross profit margin in the fourth quarter was a record 65 per cent. Rival technology shares rallied following Intel’s earnings report. Advanced Micro Devices gained 1.6 per cent, while Microsoft climbed nearly one per cent in after hours trading.