July 14 (Bloomberg) -- Intel Corp., the world’s biggest chipmaker, reported its first loss in 22 years after setting aside funds to pay a European Union fine. Second-quarter sales beat analysts’ estimates, sending the shares up 7.4 percent.

The net loss was $398 million, or 7 cents a share, Santa Clara, California-based Intel said today in a statement. Revenue fell to $8.02 billion, compared with the $7.29 billion predicted by analysts in a Bloomberg survey.

The European Union fined Intel $1.45 billion in May, saying the company used illegal rebates to thwart competitors. Intel, which accounts for about 80% of the personal-computer processor market, is appealing the decision. A recovery in orders is helping investors look past that one-time expense. Intel also forecast sales and profit margins that topped predictions.

“The forecast shows stabilization,” said Pat Becker, chief investment officer at Becker Capital Management Inc. in Portland, Oregon. “We have hit some sort of bottom in demand.”

Sales will be about $8.1 billion to $8.9 billion in the current period, Intel said. That compares with an average analyst estimate of $7.86 billion. Gross margin, the percentage of sales remaining after the costs of production, will be about 53 percent this quarter, Intel said. Chris Danely, an analyst at JPMorgan Chase & Co. in San Francisco, had predicted a third- quarter gross margin of 51 percent.

Shares Jump

Intel shares jumped $1.25 to $18.08 in extended trading. The shares rose 34 cents to $16.83 at 4 p.m. New York time on the Nasdaq Stock Market. The stock has gained 15 percent this year.

Excluding the European fine, Intel reported a profit of 18 cents a share. That topped the average analyst estimate of 8 cents. Second-quarter sales jumped 12 percent from the first quarter, the company said. Second-quarter profit was $1.6 billion, or 28 cents a share, last year.

“Intel’s second-quarter results reflect improving conditions in the PC market segment with our strongest first- to second-quarter growth since 1988 and a clear expectation for a seasonally stronger second half,” Chief Executive Officer Paul Otellini said in the statement.

Intel kicked off two weeks of earnings reports by technology companies such as International Business Machines Corp., Google Inc. and Microsoft Corp. The use of Intel’s chips in everything from laptops to supercomputers makes its earnings an indicator of industry demand.

‘Off the Table’

“The worst-case scenario of going back to the first- quarter levels of profitability is now off the table,” Daniel Berenbaum, a New York-based analyst at Auriga Securities, said before the results were announced. He has a sell rating on Intel’s shares. “Credit is at least starting to flow again.”

Sales typically decline in the second quarter from the first, then begin to rise again in the third quarter -- when computer makers increase orders to meet back-to-school demand.

In April, Intel said it was planning for second-quarter sales of about $7.1 billion. The company didn’t give a forecast for profitability at that time, saying the economy made it too difficult to predict.

PC sales may drop 4.5 percent this year as unemployment increases and companies pare budgets, according to IDC, a research firm in Framingham, Massachusetts. That would be the first decline since 2001, after the dot-com bust left a glut of PCs.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

Last Updated: July 14, 2009 16:40 EDT