Intel's quarter on target: The tech sector exhales

Update: Intel's first quarter results on Tuesday matched Wall Street's earnings estimates and topped revenue targets. Given the worries about Intel those results are good enough to chalk up as a win.

By the numbers (statement), Intel reported net income of $1.4 billion, or 25 cents a share, on revenue of $9.7 billion. Revenue was up 9 percent from a year ago, but earnings were down 11 percent. But the real bogey was Thomson Financial estimates of 25 cents a share on revenue of $9.63 billion.

More importantly, Intel CEO Paul Otellini said the company saw "healthy demand across all segments." Otellini also said he was "optimistic about our growth opportunities."

As for the outlook, Intel said revenue in the second quarter will be between $9 billion and $9.6 billion, a tally that reflects a the spin-off of its NOR flash memory business. Wall Street appears to have factored most of that revenue leakage in. The chip giant also predicted gross margin of 56 percent in the second quarter and 57 percent for 2008 give or take a couple points.

Overall, Intel's comments were in line with what analysts expected. Intel's quarter wasn't a disaster and that's viewed as good news in this market. In afterhours trading Intel shares were up almost 8 percent.

By the numbers:

• Intel's average selling prices in the first quarter were flat and gross margin was 53.8 percent. A restructuring charge of $329 million was taken and that included $275 million in assets transferred to Numonyx, the venture absorbing Intel's NOR flash business.
• In the first quarter, Intel garnered $4.78 billion in revenue from Asia-Pacific; $2 billion from the Americas; $1.86 billion in Europe and $1 billion in Japan.
• By unit, Intel's digital enterprise unit had revenue of $5.29 billion followed by the mobility group with $3.67 billion.
• R&D spending for 2008 is estimated to be $6 billion, up from the prior projection of $5.9 billion.
• Intel projects capital spending to be about $5.2 billion.
• Inventory for the quarter ending March 29 was $3.27 billion, down from $3.37 billion as of Dec. 29. Some analysts had expected inventory to rise.
• Intel ended the quarter with $13.2 billion in cash.

Update: Conference call recap:

Intel execs didn't stray far from the initial numbers the company disclosed. A few takeaways:

• The chipmaker isn't seeing a macroeconomic slowdown even from financial services firms, which are looking to boost transaction speed.
• The company talked up netbooks as a potential boon to the business. Execs sounded like they expected these netbooks to show strong demand in the future.
• Intel is seeing the benefits of the 45 nanometer manufacturing process.