Chip sector jumps on strong Intel report
A Sandy Bridge wafer is seen in this undated handout image.
Credit: Reuters/Intel.com/Handout
By Tarmo Virki and Paul Sandle
(Reuters) - Shares in semiconductor companies jumped on Friday in Japan and Europe after strong earnings report from sector bellwether Intel, the world's largest chipmaker, defied a slowdown in PC sales.
Shares in British chip designer ARM jumped 10 percent to a 10-year high, while the wider European technology sector was up 0.5 percent by 3:50 a.m. ET.
U.S. group Intel, whose microprocessors are the brains in the bulk of the world's PCs, posted market-beating revenue and margins for the fourth quarter, and also gave a rosy outlook for early 2011 overnight.
"The expectations regarding the results of the semiconductor giant Intel were not really low but Intel could overdeliver again," Close Brothers Seydler strategist Roger Peeters said.
Earlier this week, research firm IDC said weak consumer demand coupled with a surge of tablet market capped the growth in global personal computer shipments at 3 percent in the fourth quarter.
RBS Capital Markets analyst Nick Hyslop said Intel's guidance was very strong for first quarter and the company did slightly better than expected in the fourth quarter, given a growing perception that Intel's position in tablets was weak.
"People were relieved from an Intel standpoint," he said, adding a good first quarter for Intel implied a good performance from ARM "given that ARM is doing all the tablets."
Intel was the first major technology company to report fourth-quarter results, and its upbeat numbers set a positive tone for the rest of the sector.
"Intel's good comments on server sales, coupled with the positive SAP statement late yesterday, indicate that corporations investment activity has been good in the fourth quarter," Pohjola Bank analyst Hannu Rauhala said.
German group SAP, Europe's biggest software maker, said on Thursday software sales jumped about a third in the fourth quarter.
In Japan, Tokyo Electron rose 2.8 percent to 5,530 yen, Sumco added 2 percent to 1,266 yen, and Nikon Corp gained 0.7 percent to 1,875 yen.
Dutch semiconductor equipment vendors ASML and ASMI rose 2.6 percent and 3.4 percent respectively.
(Additional reporting by Christoph Steitz in Frankfurt and Li Baker in Taipei; Editing by Dan Lalor)
Credit: Reuters (www.reuters.com)
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