Intel meets lowered forecasts

Intel Corp.’s first-quarter profit matched Wall Street’s subdued expectations, a sign the company’s core microprocessor business remained healthy amid fears of a broader slowdown in technology spending.

The stock jumped about 7% in after-hours trading Tuesday after the technology bellwether forecast higher profit margins in the second quarter and signaled that it was thriving while its smaller rival, Advanced Micro Devices Inc., continues to stumble.

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

Intel’s sales of $9.67 billion -- a 9% improvement over last year and a record for the first quarter -- came in slightly higher than Wall Street’s estimate of $9.63 billion.

Intel’s chief financial officer, Stacy Smith, said the results reflected the company’s ability to overcome slumping prices in some segments of the semiconductor market with a new chip-making process that lowers manufacturing costs.

“The strength of the core business is offsetting that weakness,” he said.

Intel warned in March that a steeper-than-expected drop in prices for a type of memory chip called NAND flash -- commonly used in digital cameras and MP3 players -- hurt profit more than anticipated. Analysts lowered their estimates.

The company forecast second-quarter sales of $9 billion to $9.6 billion, which was in line with analyst expectation.

Intel’s gross profit margin -- a key measure of its ability to control the cost of making its chips -- is expected to be about 56%, higher than the 53.8% in the first quarter.

Intel shares rose $1.51, or more than 7%, to $22.42 in after-hours trading after finishing the regular session up 22 cents at $20.91.