SANTA CLARA (AP) – Intel, the big chip maker, said Friday that it will raise its dividend by 15 percent, providing welcome a note of optimism after network gear maker Cisco Systems Inc. helped drive stocks lower this week with a disappointing sales forecast.
Both companies are bellwethers for broader technology spending and investment.
Cisco provides big companies, government agencies and service providers with the equipment that routes data over the Internet. Intel is the world’s biggest maker of microprocessors — the “brains” — for personal computers.
On Friday, Intel CEO Paul Otellini said the company “remains on track to have our best year ever and we continue to generate strong cash flows.” It is raising its quarterly payout for investors to 18 cents per share from 15.75 cents starting with the first quarter of 2011.
Intel shares rose 37 cents, or 1.7 percent, to $21.58 in morning trading. But the company’s upbeat comments couldn’t lift the broader market. The Dow Jones industrial average slipped about 0.7 percent on news that China might try to slow its surging economy to combat inflation.
As a barometer for the tech sector, Intel has flashed some mixed signals over the past few months.
Back in August, the company cut its quarterly sales forecast, citing “weaker than expected demand for consumer PCs in mature markets,” including the U.S. and Europe. Then last month it offered a more encouraging fourth-quarter forecast that met expectations.
The move to raise its dividend Friday provided a counterpoint to Cisco’s weak projections.
On Wednesday, Cisco said that new orders during the most recent quarter fell short of the company’s expectations. It forecast revenue growth for the quarter ending in January at just 3 percent to 5 percent over last year, less than half the growth rate analysts expected.