Intel Inches Toward a Turnaround

Chipmaker Intel beats analysts' first-quarter estimates but is not out of the woods yet.
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Intel (INTC) - Get Report 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) - Get Report

and

Texas Instruments

(TXN) - Get Report

, 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.