Intel’s Stronger Numbers Encourage Wall Street
Stocks rallied on Wednesday in light of reports of stronger second-quarter numbers from US chipmaker Intel Corp.
On Tuesday, Intel reported a much stronger second-quarter finish than Wall Street analysts had projected, resulting in a 7.5 percent increase in its stock price during after-hours trading.
Intel’s better-than-expected results spurred confidence among traders on Wall Street on Wednesday. The firm posted a net loss of $398 million, or 7 cents per share, due in part to $1.45 billion in fines from the European Union, but the firm noted that it expects much stronger revenue during the third quarter.
Intel is planning to appeal the antitrust fine imposed by the EU, but was still forced to pay the fine until the case has been resolved.
Without the fines being taken into account, Intel’s earnings were $1 billion, or 18 cents per share. Thomson Reuters projected the Santa Clara, Calif. firm to earn 8 cents per share.
Last year, Intel posted second-quarter profits of $1.6 billion, or 28 cents per share.
“There’s no question that when you get positive [earnings] guidance from a high-profile company like Intel, that’s a very encouraging sign,” Ted Weisberg, of Seaport Securities in New York, told the Wall Street Journal on Wednesday.
Weisberg added that traders are “still viewing the rallies with some skepticism.”
Gains are being witnessed among other industries as well. The major indexes rose by about two percent, including the Dow Jones industrial average, which rose more than 150 points, according to the Associated Press.
Businesses are still cutting back on their demand for computer technologies, but Intel’s numbers were enough to encourage analysts for the future.
“I’m in shock – it’s great news,” Kevin Cassidy, a semiconductor analyst with Thomas Weisel Partners, told the Associated Press.
“It’s just amazing the market can snap back this quickly. The question is, is it sustainable?”
Intel’s rival, Advanced Micro Devices Inc., is also in the process of rebounding from billions in losses. The company is expected to report its second-quarter results next week. AMD’s shares were recently up 10 percent, according to the Wall Street Journal.
“It has to inspire some confidence in the market,” Leslie Fiering, a research vice president with Gartner Inc., told the AP “…There is uncertainty in this market, but we’re seeing improvement, and it beats the alternative.”
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