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No 'double dip' in Intel's forecast

July 13, 2010 |  4:48 pm

Computer chip giant Intel Corp.’s second-quarter earnings report was exactly what Wall Street bulls were hoping for: better-than-expected results, and a big dose of optimism about the future.

That sent the company’s shares surging 7.3% to $22.54 in after-hours trading Tuesday, after closing at $21.01, up 44 cents, or 2.1%, in the regular trading session.

The after-hours price was the highest for Intel shares since May 12.

The company reported second-quarter profit of 51 cents a share, far exceeding analysts’ average estimate of 43 cents, according to Bloomberg News estimates.

Intelsign Sales in the quarter totaled $10.77 billion, compared with the $10.25 billion that Wall Street had expected.

Intel’s leading market share in the chip industry makes it a bellwether for business and consumer spending on computers and other tech equipment. The company's results suggest that the appetite for upgrading tech hardware worldwide isn’t fading, and in fact is increasing at the business level.

In a conference call with analysts Tuesday afternoon, Intel also said that second-quarter demand exceeded its expectations in all of its geographic regions, including Europe.

While many major companies still are trying to get their revenue back to levels before the financial crash and recession hit in 2008, Intel’s second-quarter sales set a record. The previous high for sales was $10.71 billion in the fourth quarter of 2007.

More important for the stock market -- which wants a reason to douse fears that the economy could  "double dip" into recession in the second half -- Intel said it expected sales in the current quarter to set a new record, totaling between $11.2 billion and $12 billion. Analysts had been looking for $10.9 billion.

Intel also had been upbeat in its first-quarter earnings report, issued April 13. The stock jumped a total of 6.4% in the two trading sessions after that report. But the closing price of $24.22 of April 15 turned out to be the stock’s zenith in the spring rally; the shares slumped with the rest of the market in May and June, and hit a five-month low of $19.20 on July 2.

At the after-hours price on Tuesday, the stock traded for about 12 times analysts’ mean estimate of 2010 earnings per share: They’re predicting $1.87 a share for this year and $1.99 in 2011. But those numbers are likely to get a boost in the wake of the company’s second-quarter results.

-- Tom Petruno

Photo: Intel's headquarters in Santa Clara, Calif. Credit: Paul Sakuma / Associated Press