Intel Beats the Street

Intel posted better than expected results late Tuesday, but its shares fell in after-hours trading on news of continued price pressures.

Intel’s fourth-quarter earnings of 26 cents a share, or $1.5 billion, were down from 40 cents a share in the year-ago quarter, but a penny better than expected. Sales declined 5% from the year-ago quarter to $9.7 billion, but they were still well above $9.44 billion expectations. The chip giant’s March quarter sales forecast of $8.7-$9.3 billion compared favorably to Wall Street’s $8.93 billion forecast.

“Intel’s product and technology leadership yielded a strong fourth quarter with higher selling prices and record unit shipments in the fastest growing segments of the market,” CEO Paul Otellini said in a statement.

Intel said average selling prices increased in the quarter, in contrast to comments last week from rival AMD , but news that Intel’s gross margins will remain stuck around the 50% level for 2007 suggests that the price war with AMD will continue a while longer.

“We’re going to have to fight to win orders,” CFO Andy Bryant said on the company’s conference call.

Intel said higher factory underutilization charges, flash memory write-downs and NAND start-up costs weighed on margins. Microprocessor prices rose, “driven primarily by a mix shift to leading-edge processors in all segments along with growth in mobile as a percentage of the PC microprocessor mix.”

Bryant called the results “a strong ending to a difficult year.”

Intel shares fell 3% after hours.

Stocks were mixed during the day, as a warning from Symantec sent its shares tumbling 13%, weighing on the tech sector.

Apple rose ahead of its results due out late Wednesday.

CDC and SumTotal gained on their results.

FairPoint surged 16% after combining some operations with Verizon .

Phoenix Technologies gained on a buyout offer.

The Nasdaq slipped 5 to 2497, the S&P 500 gained 1 to 1432, and the Dow rose 26 to 12,582. Volume declined to 2.6 billion shares on the NYSE, but rose to 2.4 billion on the Nasdaq. Advancers led by a few issues on the NYSE, while decliners led 16-14 on the Nasdaq. Downside volume was 51% on the NYSE, and 53% on the Nasdaq. New highs-new lows were 280-14 on the NYSE, and 212-28 on the Nasdaq.

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