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Intel sees rebound after first quarter

INTEL Corp, the world's largest maker of computer chips, said profitability may rebound after the first quarter, when customers finish working through excess supplies.

Gross margin, or the percentage of sales remaining after taking out production costs, was 53 percent last quarter, the company said yesterday. That figure will be in the low 40s this quarter, marking the "trough," Chief Financial Officer Stacy Smith said.

Slumping demand for personal computers has forced Intel to run its factories below capacity, making them less profitable, Bloomberg News said. As PC makers run through existing inventory and reorder, Intel should be able to step up production. The leaner stockpiles may also help the industry bounce back more quickly once the economy turns around, unlike 2001 when a glut of chips and computers slowed recovery.

Intel, based in Santa Clara, California, rose as much as 5 percent to the equivalent of US$13.96 in Germany yesterday and traded at US$13.82 at 11:40am in Frankfurt. The stock lost 45 percent of its value last year.

Chief Executive Officer Paul Otellini also said that he intends to keep paying dividends and isn't planning a reduction.

Fourth-quarter net income dropped 90 percent to US$234 million, or 4 cents a share, from US$2.27 billion, or 38 cents, a year earlier, Intel said. Revenue may be about US$7 billion this quarter.

Spending on new plants and equipment will be little changed or slightly down from 2008's US$5.2 billion.



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