Intel 1Q Eases Investor Concerns

The firm's shares on Tuesday increased by 22 cents or 1.1 percent, to $20.91 earlier in the session but reports about the earnings increased further the stock to $22.45.

"The company's main business of selling computer processors is getting stronger," said Stacy Smith, Intel Chief Financial Officer.

Santa Clara-based Intel said Tuesday that its net profit for the three months ended March 29 was $1.44 billion, or 25 cents per share. That's a 12 percent decline from the year-ago period, when Intel earned $1.64 billion or 28 cents per share. But it was in line with the average estimate of analysts polled by Thomson Financial.

There were concerns among investors that Intel would be brought down by price cuts in its memory business and a slowdown in computer purchases.

Both Intel and its closest rival Advanced Micro Devices Inc. (AMD) had issued warnings in the first quarter, increasing fears about PC sales due to a weak U.S. economy, but Intel's report eased concerns.

The chipmaker had set margin expectations to 54, plus or minus a point for the first quarter while focusing on memory chip prices that seemed to be hurting its first quarter profit but the first quarter margin finished at 53.8 percent.

Intel said it expected its second quarter revenue to be between $9.0 billion and 9.6 billion and a gross margin of 56 percent plus or minus a couple of minutes.

Smith said that the selling price for Intel's chips was little changed in the first quarter compared with last quarter.

Intel shares have declined by 21 percent this year.