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Wednesday, May 13, 2009

Intel CEO says orders better than expected so far

SANTA CLARA, California (Reuters) - Intel Corp's orders and billing patterns so far in the second quarter have been slightly better than expected, Chief Executive Paul Otellini said on Tuesday.

He told investors that second-quarter sales depend on how they fare in June but "so far, so good" -- in remarks that sent shares of the world's biggest chip maker up as much as 4 percent in extended trading.

"We are halfway through Q2," Otellini said. "In terms of our order pattern and our billing pattern, it's a little better than expected."

Last month, Otellini said the worst was over for the battered tech sector as Intel reported its first-quarter earnings, but its shares slid as executives said economic uncertainty prevented them from giving a detailed outlook.

Intel, which controls 80 percent of the microprocessor market, is seen as a bellwether for the personal computer and technology industry. But it has struggled in the economic downturn, shutting plants and trimming 1,400 jobs since the fourth quarter.

Otellini said on Tuesday that Intel should end the year with around 78,000 employees, down about 25 percent from a peak of 103,000 in 2006.

Intel has said it was planning for second-quarter revenue to be flat with the $7.1 billion reported in the first quarter. But some analysts said the guidance was conservative, and Reuters Estimates showed analysts expecting a slight increase in each quarter for a year-end total of $30.3 billion.

But that would still be more than $7 billion less than last year's revenue, with earnings per share seen falling more than 40 percent to 53 cents a share, according to Reuters Estimates.

Analysts say Intel's biggest concern is filling its factories. The company posted a first-quarter gross margin of 45.6 percent, down from 53.1 percent in the fourth quarter. About 6 percentage points of that decline came from factory under-utilization charges, Intel has said.

But research from iSuppli last week show demand for portable phones and computers may cause factories to run closer to capacity. Chip plants, which ran at less than half their capacity in the first quarter of 2009, should operate at three-quarter capacity by the fourth quarter, iSuppli said.

Shares in the Santa Clara, California-based Intel were quoted at $15.73 in extended trading, up 3.4 percent from their Nasdaq close of $15.21.

(Reporting by Clare Baldwin and Alexei Oreskovic; Editing by Steve Orlofsky, Richard Chang)

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