Intel ( INTC) has given the first hint of a tech sector turnaround, citing a recovery in PC sales.The tech bellwether beat the street's estimates in its first-quarter results, which were released after market close Tuesday, although the firm's profits tumbled in a tough economy. Intel reported revenue of $7.1 billion, down from $9.7 billion in the same period last year, but above analyst estimates of $6.98 billion. "We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns," said Paul Otellini, the Intel CEO, in a statement. "Intel has adapted well to the current economic environment and we're benefiting from disciplined execution and agility." Intel reported earnings of 11 cents a share on net income of $647 million, compared to 25 cents and net income of $1.4 billion in the year-ago quarter. Analysts expected the chip manufacturer to earn 3 cents a share. Despite its turnaround talk, Intel's shares fell 59 cents, or 3.69%, to $15.42 in extended trading. Investors were eagerly awaiting Intel's results for insight into the the health of the tech sector. Like most semiconductor firms, Intel has taken a battering during the economic downturn, and the company's fourth-quarter revenue plunged 14% year over year. With widespread uncertainty about when the chip market will rebound, Intel's results offer up at least some indication of tech spending levels. However, the Santa Clara, Calif.-based firm is hardly out of the woods, having seen revenue from its Atom processor slip 27% sequentially. Intel also said that the average selling price for all its microprocessor was approximately flat compared to the prior quarter.
With Intel sitting on a mountain of aging PC chips, the coming months will be crucial for the company, which recently launched its next-generation Nehalem chip. Intel, which competes with AMD ( AMD) and Texas Instruments ( TXN), did not provide any formal second-quarter revenue guidance, but does not foresee any sales uptick. "For internal purposes, the company is currently planning for revenue approximately flat to the first quarter," it said, in a statement.