Intel Corp., the world's biggest chipmaker, predicted fourth-quarter sales that beat analysts' estimates, helped by demand in emerging economies.

Revenue this period will be $11.4 billion, plus or minus $400 million, Santa Clara, California-based Intel said yesterday in a statement. That compares with an average projection of $11.3 billion, according to data compiled by Bloomberg.

Corporations and households in less developed markets bought more computers, helping Intel weather slumping demand among consumers in the U.S. and Europe, Intel Chief Financial Officer Stacy Smith said in an interview. The results bode well for computer makers, including Dell Inc. and Hewlett-Packard Co., which also benefit as businesses upgrade dated machines.

"It's clearly a positive for those companies in the PC and enterprise space," said Pat Becker Jr. of Becker Capital Management Inc. in Portland, Oregon. The company owns shares of Intel as part of the $2.2 billion it oversees. "The margins in that help overcome some of the weakness we've seen in the consumer in August."

The last four weeks of the quarter were better than the company predicted, Smith said on a call with analysts. That improving demand was the basis for the company's predictions for the fourth quarter. Component inventory remains "lean" throughout the computer supply chain, he said.

Eoin Treacy's view The technology sector is one of the prime beneficiaries of lower interest rates, a weak Dollar and growth in the global middle class. Intel, while not currently among the leaders, is a useful barometer for the technology sector generally and the fact that its earnings are coming in ahead of estimates can be viewed as a positive. Chip manufacture will always feature highly in the technology sector but is currently being overshadowed by the growth of cloud computing. (Also see Comment of the Day on September 23rd)


Broadly speaking, Intel remains in a decade long base formation which will not be completed until it sustains a move above $27. In the meantime, it encountered resistance below $25 from April and remains in a six-month downtrend. It found at least short-term support in September and the current rally is about the same size as that posted in July. It is testing the 200-day MA and needs to hold a move above $20 to indicate demand is regaining the upper hand beyond the short term.

ASML was a stronger performer from the 2008 lows but also pulled back from its April high. It found support in the region of €20 from early September and a sustained move below hat level would be required to question scope for further higher to lateral ranging.

Citrix System which has been leader in the cloud computing had accelerated well away from its 200-day MA by late September and pulled back abruptly last week. It is beginning to lose downward momentum and while an upward dynamic would help to confirm the return of demand, the share may be coming back into a medium-term buying range.

BMC Software is pulling away from the $40 area and a sustained move below that level would be required to question medium-term upside potential.

Check Point Software hit a new 8-yr high three weeks ago, completing the 1st step above its base. A sustained move below the 200-day MA, currently near $33.50 would be required to question medium-term upside potential.

Cognizant Technology Solutions Corp remains in a consistent two-year uptrend and while somewhat overbought at the moment, a sustained move below the 200-day MA, currently near $53.50 would be required to question medium-term upside potential.

Oracle continues to hold the breakout to new medium-term highs and a sustained move below the 200-day MA, currently near $24 would be required to question medium-term upside potential.

Juniper Networks remains in a long-term base. The $32 area, which it is currently testing, has been an area of resistance for much of the last decade and a sustained move above that level would increase potential that demand is returning to medium-term demand dominance.

Amazon continues to sustain the breakout from the yearlong range and a sustained move below the 200-day MA, currently near $130 would be required to question medium-term upside potential.

Google broke back above the 200-day MA in September and continues to advance. A sustained move below the psychological $500 level would be needed to check near-term scope for further upside.

This link to IBM's cloud computing discussions may be of interest to subscribers. The share broke upwards to new highs last month and a sustained move back below $130 would be required to question medium-term upside potential.

Apple has also sustained the breakout from the five-month range and would need to sustain a fall below $250 to question the consistency of the medium-term uptrend.