By Michal Lev-Ram

Intel announced first-quarter sales and full-year guidance that beat Wall Street estimates after the market close on Tuesday, sending shares up more than 8% in after-hours trading.

Intel’s (INTC) sales came in at $9.7 billion, above the $9.63 billion analysts had expected and up 9% compared to its year-ago quarter.

The chipmaker also reported earnings of 25 cents per share, in line with analysts’ projections but below the 27 cents per share the company earned in the same period a year ago.

“Our first quarter results demonstrate a strengthening core business and a solid global market environment,” said Paul Otellini, chief executive of Intel in a written statement. “We saw healthy demand for our leading-edge processors and chipsets across all segments.”

Intel’s second-quarter outlook was upbeat as well. The company raised its forecast for the quarter, saying it is projecting sales of $9 billion to $9.6 billion, compared with current estimates of $9.2 billion. It also said it anticipates slightly better-than-expected profit margins for the current quarter and full year.

But it’s been a bumpy few months for the Santa Clara, Calif.-based semiconductor giant. The company lowered its sales targets for the first quarter in January. Last month, it reduced its first-quarter gross margin forecast to 54% — compared to a previous forecast of 56%. According to today’s first-quarter results, gross margins came in at 53.8%.

Gross margins, which measure how much money a company makes after subtracting cost of sales, is a key profitability metric in the chip industry that is looked at closely by analysts. Intel cited lower than expected prices for the type of flash memory chips used in digital cameras and MP3 players last month as the reason margins would be lower than it first anticipated.

On Tuesday the company said that strength in its microprocessor business — the type of chips used in PCs and servers — will help offset the decline in memory prices.

Rival Advanced Micro Devices (AMD) has also been challenged due to worries that a slowdown in economic spending is weakening PC demand. AMD recently said first-quarter sales would be well below expectations, and that it would cut about 10% of its staff, or 1,600 jobs. AMD will report its first-quarter results on Thursday.

By Scott Martin

Novatel’s big miss (NVTL) offers a glimpse of how slumping tech spending can pinch a weak player.

The wireless modem maker warned Monday that first-quarter sales came in below its target. Revenue was $91 million, or 9% below its previous forecast. Novatel will release its disclose its full earnings for the quarter on May 1.

Novatel blamed a product glitch for delays in its supplies of USB devices to a European customer, in a press release Monday after the market closed. But it became clear on a conference call with analyst that other factors weighed heavily on the San Diego tech shop. Among the problems in the quarter ended March 31 was the continued collapse of Sprint (S), a big buyer of so-called 3G modems. The company also saw sluggish demand from another key customer Dell (DELL), which has seen its own share of struggles in the PC market.

Novatel’s product stumble, combined with weakening customers, left the door open for a third condition familiar to players in a cutthroat market beset by slowing orders — losing business to a rival. In this case, wireless modem giant Sierra Wireless (SWIR) swept up business that Novatel expected to book. Novatel shares fell 21% Tuesday in the wake of the warning.

The triple treat was too much for Novatel’s board. The company also announced that Peter Leparulo, the company’s chairman and former chief, would take over immediately as CEO from Brad Weinert, who will continue as president.

“Everyone around this table agrees that better execution is required for this unforgiving market, where carriers are looking to maintain leaner inventories,” Leparulo told analysts on a conference call Monday.

Brace for a rough ride, he seems to be saying, which is something tech investors and analysts fear they will be hearing a lot this earnings season.

By Scott Moritz

Heads have started to roll at AMD (AMD), as technology chief Phil Hester resigned with no replacement planned, according to the Wall Street Journal.

The news comes less than a week after the chipmaker announced a 15% sequential sales shortfall and plans to cut 10% of its staff due to weak demand across all its business segments.

AMD did not immediately respond to a request for comment.

Analysts point to a slowing economy and a critical delay of AMD’s quad-core Barcelona chip for the server market as two major reasons for the company’s current woes.

AMD, which has already pulled Hester’s bio from its Web site, called Hester the top executive “responsible for setting the architectural and product strategies and plans for AMD’s microprocessor business.”

The company is in a brutal battle with rival Intel (INTC) and has been on the losing end recently due to misfirings like the Barcelona glitch. AMD follows Intel’s earnings report Tuesday with its full first-quarter report on Thursday.

AMD shares were down a nickel to $6.22 in midday trading Friday.

By Scott Moritz

The tech sector — read Cisco (CSCO), EMC (EMC), Dell (DELL), Hewlett-Packard (HPQ) – got hit with more bad news as computer networking shop Foundry (FDRY) reported a sales shortfall in the first quarter. The news comes on the same day that everyone’s favorite conglomerate, GE announced a stunning profit warning  sending the market down early Friday.

GE (GE) said its weakness was in its financial services business, tied to a slowing economy and a rough credit market. The rising economic pressure has helped dampen demand for new information technology systems says Foundry, which cut its first quarter sales target to $149 million, 9% below analysts estimates.

In the first quarter, business was more challenging because the “macroeconomic environment evolved from the financial market crises which we believe led some customers to delay their purchase decisions,” Foundry CEO Bobby Johnson said in a press release.

The news gives tech investors another splash of ice water and comes two weeks after Fortune reported that Cisco was doing some belt tightening as growth in orders slows.

Foundry shares fell 9% and Cisco was down 2% in early trading Friday.

Showing it has alternatives to Microsoft’s hostile merger bid, Yahoo (YHOO) is talking to Google (GOOG) about a joint search-advertising trial, according to a report posted on The Wall Street Journal’s site.

The discussions with Microsoft’s biggest rival come less than a week after Yahoo was given a 3-week deadline by Microsoft to come to the table and negotiate.

The tests are to be limited and not nessarily a deal killer for the Microsoft/Yahoo takeover, but it could lead to a larger partnership between the two search engine giants, the Journal reports.

One of the issues the outsourcing of search ads to Google would address is the heavy costs Yahoo faces in hosting and powering its own server facilities and infrustructure.

Yahoo, along with large shareholder Legg Mason, are attempting to show that the company can thrive independently if necessary.

By Scott Moritz

Looking for a steady hand and a seasoned deal maker, Motorola (MOT) picked former AT&T (T) chief Dave Dorman as its next chairman.

Dorman will replace Ed Zander who retires next month, and work with Motorola CEO Greg Brown to spin off the company’s mobile phone unit next year. Dorman has been a senior advisor with private equity shop Warburg Pincus for the past 18 months since he left Ma Bell.

It’s probably no coincidence that Dorman’s chief accomplishment on his 28-year telecommunications resume is the $16 billion buyout of AT&T by SBC in 2005. SBC subsequently took the AT&T name. It is no secret that Motorola would like to find a rich buyer to take the phone unit off it hands.

Motorola’s tumble from the top of the cell phone heap has landed the company in the bargain basement marked last week by the stock’s four-year low. With out a successor to the popular Razr phone, Motorola has been in a freefall. The cell phone operation has plunged into red ink and, with no big buyers to salvage the business, the unit is now scheduled to be spun off to shareholders.

Under a truce agreement Monday with activist stakeholder Carl Icahn, Motorola has agreed to add two Icahn picks to the company’s board. The new members – investment banker Bill Hambrecht and Icahn Enterprises chief Keith Meister – have Icahn’s say on major strategy decisions and the choice of a CEO for the soon-to-be-spun phone business.

Dorman’s role seems clear, he brings his veteran telecom leadership, should CEO Brown find himself over his head, and perhaps more importantly, Dorman can steer toward deals.

He’s had a lot of M&A experience in his recent work history, says Forrester analyst Lisa Pierce. Among his strengths, says Pierce, is that he can “shop the pieces of the business to one or two acquirers.”

By John Simons

In a move that should help News Corp.’s efforts to optimize and sell online advertising across its global network of Web sites, the media giant announced Tuesday that it has acquired a majority stake in Utarget, a U.K.-based company that offers advertisers and Web sites technology and ad sales services.

Utarget has a network of more than 630 client Web sites, where the company helps advertisers place commercial video clips. Based in London, Utarget focuses on Europe Web sites, but generates the majority of its revenues in the U.K. The News Corp. unit that orchestrated the acquisition, .Fox Networks, is an advertising placement firm that helps advertisers position their come-ons on News Corp.’s Web sites in more than 20 countries, including the U.S. For the time being, Utarget will continue to concentrate on opportunities outside of the U.S.

News Corp.’s investment comes at a time when advertisers are flocking to the Web in search of better returns on their ad spending. At the same time, an increasing number of consumers are viewing video content on the Web, the kind of content Utarget seeks to adorn with ads.

With its undisclosed investment in Utarget, says Hernan Lopez, president of .Fox Networks, “we are internationalizing ad sales opportunities.” Lopez explains that Utarget can, for instance, help a Web site based in Spain sell ad space to advertisers in Argentina or Mexico, where they might have a large number of viewers, but no salesforce to sell ads. Utarget can also, then, offer its technology to help advertisers create targeted advertisements.

Lopez says the .Fox Network is in preliminary talks with News Corp.’s Fox Interactive Media division to use Utarget’s services to facilitate ad sales on News Corp.’s U.S.-based Web sites. In recent weeks, reports surfaced that the Fox Interactive division, whose crown jewel is MySpace, is likely to miss its 2008 revenue target of $1 billion. That news prompted the company to reorganize the division last week.

It’s time for a change at British Telecom (BT) as CEO Ben Verwaayen steps aside after six years, giving the top job to the company’s consumer chief, Ian Livingston, effective in June.

The move comes after Verwaayen shifted the U.K. phone giant’s focus more toward corporate data and business services. That move broadened the former state-owned telecom’s range, but a slowdown in sales and a costly network upgrade project called 21st Century Network dogged the company’s recent financial performance.

Dutch-born Verwaayen, a former chief operating officer at Lucent (ALU) in New Jersey, says the change was his idea. “It was time to make a move,” he said. “We have a great bench of people from all walks of life. I told the board ‘Let’s do it and let’s do it quickly and orderly.’”

Verwaayen says he’s made no plans for what he’ll do after June 1, but he added, “I’m a global guy, I go where the action is.”

He had no comment on Motorola’s (MOT) search for a new mobile phone chief other than to say that “the handset business is a tough business.”

Looking back, networking equipment sales was a tough business at Lucent during the Net building bust. And turning a big national phone company into a international data service provider wasn’t exactly easy. So its hard to know if “tough” is an invitation or a warning to a hard-charger such as Verwaayen.

The consumer tech sector takes another hit as GPS gadget maker TomTom became the second outfit to warn of a big revenue shortfall. 

The No.2 navigation device maker says slumping demand and an escalating price war caused it to cut its first-quarter and full-year sales forecast. The company says it now expects first-quarter sales to be around $416 million, well below the $540 million range that was expected. For the full year, TomTom says it expects sales in the $2.9 billion range, below expectations in the $3.4 billion vicinity.
Though TomTom said the greatest drop in business was in Europe, shares of U.S. rival Garmin (GRMN) took a 4% fall as investors see more evidence of a slowdown in a once-hot electronics segment.
TomTom’s warning comes less than a day after PC chipmaker AMD (AMD) cut its first-quarter numbers on weak sales across all its business lines. The news adds more concerns about the health of tech spending overall. To date, the sales weakness has largely been felt among suppliers to big businesses. Networking gearmakers like Riverbed (RVBD) have cut projections and tech giant Cisco (CSCO) is doing some belt tightening  as corporate orders slip.

Now with continued PC market woes and an even steeper than expected skid in the GPS market, it seems the slowing economy may be dragging down consumer spending in a few key areas.

AMD (AMD) will slash jobs by 10% amid a sales shortfall for the first quarter, which ended a week ago. The chipmaker says it saw a drop in demand across all its business segments during the quarter.

The company expects to book $1.5 billion in revenue for the first quarter, about $120 million below Wall Street estimates and down 15% from the prior quarter. The company says it will cut about 1,600 workers from its ranks to shave expenses. The company, which will release its earnings report April 17, expects to take a restructuring charge in the second quarter.

AMD shares were halted in after hours Monday and rival Intel (INTC) fell 33 cents to $21.42