Intel Jumps After Asian Consumers Spur Comeback in PC Industry

July 15 (Bloomberg) -- Intel Corp. rose as much as 8.4 percent in late trading yesterday after its revenue forecast topped analysts’ estimates, indicating that shoppers in Asia are helping reignite demand for personal computers.

Sales will be as much as $8.9 billion in the current quarter, Intel said yesterday. That compares with an average estimate of $7.86 billion in a Bloomberg survey of analysts.

PC makers are boosting orders for chips in anticipation of increasing demand in the second half, Chief Executive Officer Paul Otellini said. While businesses probably won’t start buying new PCs until next year, consumers in Asia -- especially China -- are leading the recovery, he said. Intel reported a 12 percent jump in second-quarter sales from the previous three months, the largest sequential increase since 1988.

“Intel’s results reflect the stabilizing environment,” said Patrick Wang, a New York-based analyst at Wedbush Morgan Securities. Wang, who rates the stock “outperform,” owns the shares personally. “It was a superb quarter for them.”

Intel, based in Santa Clara, California, jumped as much as $1.42 to $18.25 yesterday in extended trading. The shares, up 15 percent this year, closed at $16.83 on the Nasdaq Stock Market.

Intel’s Asia-Pacific sales were $4.41 billion last quarter, up 21 percent from the first quarter. Sales in the Americas rose 12 percent sequentially, while Europe dropped 9.4 percent.

European Fine

Intel set aside funds in the second quarter to pay a $1.45 billion European Union fine, resulting in its first loss in 22 years. The net loss was $398 million, or 7 cents a share, compared with a profit of $1.6 billion, or 28 cents, a year earlier.

The European Union announced the fine in May, saying the company used illegal rebates to thwart competitors. Intel, which accounts for about 80% of the PC processor market, is appealing the decision.

Excluding the European fine, Intel reported a profit of 18 cents a share. That topped the average analyst estimate of 8 cents. Revenue fell 15 percent from a year earlier to $8.02 billion, compared with the $7.29 billion predicted by analysts.

There is “a clear expectation for a seasonally stronger second half,” Otellini said on a conference call.

Profit Margin

Gross margin, the percentage of sales remaining after excluding costs of production, will be about 53 percent this quarter, Intel said. Chris Danely, an analyst at JPMorgan Chase & Co. in San Francisco, had predicted 51 percent.

Sales typically decline in the second quarter from the first, then begin to rise again in the third quarter -- when computer makers increase orders to meet back-to-school demand.

Intel kicked off two weeks of earnings reports by technology companies such as International Business Machines Corp., Google Inc. and Microsoft Corp. The use of Intel’s chips in everything from laptops to supercomputers makes its earnings an indicator of industry demand.

Intel cut its 2009 budget for plants and equipment to about $4.7 billion, down from $5.2 billion last year. The company had said previously that the budget would be little changed from 2008.

PC sales may drop 4 percent this year as companies slash spending on technology, according to El Segundo, California- based ISuppli Corp. That would be the first decline since 2001, when the dot-com bust left a glut of PCs.

Intel’s Otellini said yesterday that the company isn’t expecting corporate spending to improve this year. Microsoft’s new operating system, Windows 7, will likely fuel purchases next year, he said.