Intel : PC Industry Recovering

Intel's fourth-quarter earnings breezed past Wall Street's expectations, and its rosy profit outlook for 2010 was another sign that a lasting recovery for the recession-battered personal computer market is under way. As the first major technology company to report its results for the last quarter, Intel is seen as a barometer for the PC market and for technology spending in general. Its revenue beat the Street, as did its gross margin, which can measure how well Intel managed costs. Investors were restrained in their enthusiasm. Shares of the No. 1 maker of computer microprocessors edged up less than one percent in after-hours trading. Earlier, the stock had gained 2.5 percent to end the regular session at $21.48. PC shipments grew more sharply than expected in the fourth quarter, a promising sign after a brutal year for the industry during the recession. Intel, which supplies the vast majority of the "brains" inside computers, rode the resurgence of consumer PC shopping to a profit of $2.3 billion, or 40 cents per share. That was more than nine times as much as it earned in the year-ago quarter, when profit totaled $234 million, or 4 cents per share. Intel also posted its highest gross profit margin in history, at 64.7 percent. A higher gross margin number means the chipmaker was able to turn more revenue into profit. It's a key measure for a manufacturing-intensive company such as Intel because it reflects how well costs are held in check. Revenue climbed 29 percent to $10.6 billion, as Intel sold more chips, many at higher prices than in the past. Analysts expected a profit of 30 cents per share and $10.2 billion in revenue, according to a Thomson Reuters survey. It's never clear whether chip sales line up with demand for new computers. PC makers might be buying more than they need to replenish low supplies or fewer than they need to preserve cash. But Intel clearly sees the fourth quarter as more than a holiday shopping-induced blip.