By AP Technology Writer
updated 3/11/2005 7:52:21 AM ET 2005-03-11T12:52:21

Intel Corp. narrowed its first-quarter sales forecast Thursday to the high end of its previous estimate and said gross margins were exceeding expectations largely because of lower startup costs associated with a new manufacturing technology.

Intel now expects first-quarter sales to be between $9.2 billion and $9.4 billion. In December, the company predicted revenue of between $8.8 billion and $9.4 billion. The company does not provide earnings guidance.

The new estimate exceeds Wall Street expectations. Analysts expect the company to earn 28 cents per share on sales of $9.15 billion, according to a survey by Thomson First Call.

Intel's gross margin _ the closely watched difference between sales and the cost of the products sold _ is expected to be about 57 percent, compared with the previous forecast of 55 percent plus or minus "a couple points."

Intel's strong financial performance continues even after it faced numerous product delays, outright cancellations and criticism for letting smaller rival Advanced Micro Devices Inc. take the lead on some technological fronts.

That appears to be changing in 2005. Just a few months into the year, the maker of the Pentium 4 chip has released a number of processors that can address more memory than previous generations and maintain full compatibility with older software. AMD has been offering such a chip since 2003.

Intel and AMD also are in a race to release their first processors with two computing engines on a single chip. That's expected to improve performance when multiple programs are running on a system at once or when a single program is designed to take advantage of it.

Notebooks based on Intel's Centrino wireless technology also have seen strong acceptance by both businesses and consumers. AMD formally launched its Turion mobile processors on Thursday, though it's unclear how competitive the model will be against Centrino's long battery life.

Intel's updated forecast was released after the financial markets closed. Earlier, shares gained 1 cent, to finish at $24.85, in regular trading on the Nasdaq Stock Market. In the extended session, they gained 59 cents, or 2.3 percent

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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