At the same time, the company announced that it would cut about 3,000 jobs over the next six months, mostly through attrition.
During the quarter, Intel's sales declined to $6 billion from $6.4 billion a year ago. The company finished with $0.72 in earnings per share following a charge associated with its purchase of Chips & Technologies Inc.
Antsy investors await Intel verdict.
First Call consensus was looking for a profit of $0.72 per share.
"It's a tense time for some and not so much for others," said Bill Milton, analyst at Brown Brothers Harriman. "Historically, Intel always beats the number. Now that they've pre-announced this quarter, it would be a real surprise if they fell short of the revised estimate."
The NASDAQ Composite Index rose more than 16 points Tuesday, as investors bet Intel would have positive comments about its second-half prospects during a conference call later in the day.
The index unofficially closed up 17.86 points -- or 0.98 percent -- to 1842.81 on volume of 772 million shares. Advancers unofficially led decliners 2,553 to 1,959.
Intel was by far the most active NASDAQ stock Tuesday, ahead of its first-quarter earnings report.
"We heard Intel is going to talk up its second-half on the conference call tonight," one trader said.
Intel warned of Q1 drop
In the first week of March, Intel warned that its first-quarter revenues would be off 10 percent from its fourth quarter. After making more than $1 per share in its three quarters, Intel will likely report its lowest quarterly earnings-per-share since making $0.59 per share in the second quarter of 1996.
Intel's announcement came just days after Applied Materials Inc. (AMAT) warned that sales throughout 1998 would be flat and a week before Cabletron Systems Inc. (CS) would fall well short of expectations. Also, Compaq Computer Corp. (CPQ) said it would miss its first-quarter numbers.
"Everyone wants to know how Intel did, because they are the real barometer," said David Wu, an analyst at the Chicago Corp. "You'll see equal parts greed and fear (Wednesday) after Intel reports. It's the nature of the beast."
Intel shares were trading near $95 per share in February before firing off its earnings warning. In the past month, the stock has stagnated at around $75 per share.
A repeat of 1997?
The situation is eerily similar to that of the third quarter of 1997. Coming off a red-hot summer that included 60-percent and 100-percent growth, respectively, for Dell and Compaq, a batch of earnings warnings held technology stocks in check through the fourth quarter.
"It's the same thing, really, just another set of problems," said Megan Graham-Hackett, an analyst at S&P Equity Group. "Then, it was fourth-quarter sales and the possibility of an interest rates being raised. Now, it's Asia and perhaps some unrealistic expectations."
Last quarter, Intel reported a profit of $1.7 billion, or $1.07 per share, on sales of more than $6.5 billion.