April 15 (Bloomberg) -- Intel Corp. posted first-quarter profit that met analysts' estimates and forecast sales that may top projections as demand holds up in the face of an economic slowdown in the U.S., sending the shares up 8 percent.

While some analysts predicted an industrywide slump, Intel's main business of selling computer microprocessors is getting stronger, Chief Financial Officer Stacy Smith said today in an interview. Intel, the world's biggest chipmaker, said it expects $9 billion to $9.6 billion in revenue this quarter, compared with an average estimate of $9.25 billion in a Bloomberg survey.

Intel proved the analysts wrong by posting 17 percent growth in the Americas last quarter. The results eased concern among investors that Intel would be dragged down by price cuts in its memory business and a slowdown in computer orders after rival Advanced Micro Devices Inc.'s sales missed estimates last week.

``The core microprocessor business was better than people expected,'' said Jim Grossman, an analyst at Thrivent Financial for Lutherans, which manages $73 billion in assets, including 7 million Intel shares. ``A lot of people called for the guidance to fall short and inventory to have built up. None of that occurred.''

Intel, based in Santa Clara, California, rose $1.63 to $22.54 in extended trading after closing at $20.91 on the Nasdaq Stock Market. The stock has lost 22 percent this year.

Spinoff Expense

Held back by costs to spin off a unit, first-quarter net income declined 12 percent to $1.44 billion, or 25 cents a share, from $1.64 billion, or 28 cents, a year earlier, Intel said today in a statement. Sales gained 9.3 percent to $9.67 billion.

Intel spent $300 million in the period to shed a money- losing business, forming a joint venture called Numonyx with STMicroelectronics NV. The business sells Nor flash memory, chips used to store programs in mobile phones.

Analysts had predicted that Intel would report first-quarter net income of 25 cents a share on sales of $9.65 billion, according to the Bloomberg survey. The year-earlier results also included a tax benefit of $300 million, or 5 cents a share.

Intel, whose results serve as a bellwether for computer demand, kicked off earnings season for U.S. technology companies. International Business Machines Corp., the world's biggest computer-services company, will report its first-quarter results tomorrow, followed by Advanced Micro on April 17.

Flash Memory

Intel said last month that a glut of flash memory, which stores data in mobile devices such as Apple Inc.'s iPhone, was hurting first-quarter profit. The company entered the market for so-called Nand flash after forming a joint venture with Micron Technology Inc. in 2005.

Thrivent's Grossman said last week that Intel should consider exiting that business if it can't be made profitable.

Analysts surveyed by Bloomberg have cut their projections for first-quarter earnings at S&P 500 companies every week since Jan. 4. They now predict a 12.3 percent drop, compared with an estimate for an increase of 4.7 percent at the start of 2008.

Countering analysts' predictions, Intel forecast gross margin, the percentage of sales remaining after deducting the cost of production, of about 56 percent in the second quarter. That was up from 53.8 percent last quarter. Gross margin is the only profit measure that Intel forecasts.

Intel also reiterated its annual gross margin target of 57 percent. Piper Jaffray & Co. analyst Gus Richard, who predicts that Intel will fall short of that mark, said the company may find it more difficult to maintain growth in the second half, when a slowing U.S. economy has more effect on overseas demand.

Chief Executive Officer Paul Otellini said there are no signs of economic weakness hurting the company's sales in either the U.S. or Europe.

``We don't see it impacting our business at this time,'' Otellini told analysts on a conference call.

Advanced Micro, based in Sunnyvale, California, said last week that its first-quarter sales were about $1.5 billion, missing its projections.

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

Last Updated: April 15, 2008 21:11 EDT