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Intel Narrows 2Q Forecast

The company now says it expects revenue for the quarter to be between $8 billion and $8.2 billion, citing continued strong demand for computer chips.
SAN JOSE, Calif. (AP) -- Citing continued strong demand for computer chips, Intel Corp. tightened and raised the midpoint of its second-quarter revenue forecast Thursday.

The world's largest semiconductor company said it expects revenue to be between $8 billion and $8.2 billion. In April, it predicted revenue would be between $7.6 billion and $8.2 billion. The company does not release earnings forecasts.

Analysts expect Intel to earn 26 per share on sales of $7.96 billion, according to a survey by Thomson First Call. The second quarter, which ends June 26, is historically among the weakest for Intel and other high-tech companies.

Processors used in desktop PCs, notebooks and some servers are within expectations but "significantly higher" than the same period last year, Intel said. The communications chip business is "trending above" forecasts due to increased demand for flash memory primarily used in cell phones, the company said.

Intel also said its income tax expense will be reduced by $60 million during the quarter as a result of the closure of a state income tax audit. No other details were released.

In recent weeks, Intel has released new versions of the Pentium M processors used in its Centrino chip sets and the Mobile Pentium 4 processors for high-powered laptops. It also released an update to its flagship Pentium 4, which now has a top speed of 3.4 gigahertz.

The Santa Clara-based company also has seen renewed competition from Advanced Micro Devices Inc.'s Athlon 64 processors for PCs and Opteron chips for servers.

Overall, prices have remained relatively steady, said Merrill Lynch analyst Joe Osha in a recent research report. For the three most expensive chips, prices have declined only 4 percent in 2004, compared to drops of 22 percent and 36 percent in the previous two years.

"Competitive pressure from AMD in the desktop and notebook markets has been minimal," Osha wrote.

The mid-quarter update was released after the close of financial markets. Earlier, shares of Intel closed at $27.41, down 60 cents, in Thursday trading on the Nasdaq stock Market.

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