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Intel lifts forecast of quarterly revenue

Stronger demand for chips credited

SAN JOSE, Calif. -- Intel Corp. narrowed its first-quarter sales and gross margin forecasts yesterday to the high end of its previous estimates, crediting stronger-than-expected demand for its chips and lower start-up costs associated with a new manufacturing technology.

Intel now expects first-quarter sales to be between $9.2 billion and $9.4 billion. In December, the company predicted revenue of between $8.8 billion and $9.4 billion. The company does not provide earnings guidance.

The new estimate exceeds Wall Street expectations. Analysts expect the Santa Clara company to earn 28 cents per share on sales of $9.15 billion, according to a survey by Thomson First Call.

Andy Bryant, Intel's chief financial officer, said demand for Intel's chips was better than expected around the world. Still, he said the financial performance was in line with historical patterns.

Intel's gross margin -- the closely watched difference between sales and the cost of the products sold -- is expected to be about 57 percent, compared with the previous forecast of 55 percent plus or minus ''a couple points."

Intel's strong financial performance continues even after it faced numerous product delays, outright cancellations and criticism for letting smaller rival Advanced Micro Devices Inc. take the lead on some technological fronts.

That appears to be changing in 2005. Just a few months into the year, the maker of the Pentium 4 chip has released a number of processors that can address more memory than previous generations and maintain full compatibility with older software. AMD has been offering such a chip since 2003.

Intel and AMD also are in a race to release their first processors with two computing engines on a single chip. That's expected to improve performance when multiple programs are running on a system at once or when a single program is designed to take advantage of it.

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