Intel Corp beat quarterly expectations and declared the worst was over for a battered tech sector, but its shares slid 5 percent after it said economic uncertainty ruled out a clear revenue forecast.

The world's top chipmaker said on Tuesday personal computer sales hit a trough in the first quarter but there was still too much market and economic turbulence to allow a precise projection for the second quarter.

Intel said that for internal purposes, it was planning for revenue to come in flat after the first quarter's $7.1 billion, versus analysts' average estimate of $7 billion. Some, hoping for improvement in coming quarters, wondered if Intel was not being overly cautious.

The question is, 'Is management being conservative?' said Wedbush Morgan analyst Patrick Wang. Especially with the CEO talking about PC sales bottoming out.

Shares of the chip giant, a bellwether for the market and the global PC industry, fell, dragging down Standard & Poor's 500 and Nasdaq 100 stock index futures.

Before Tuesday's after-hours drop to $15.20 from a close of $16.01, Intel stock had leapt 32 percent from a 2009 nadir of $12.01. That rise was nearly twice the Nasdaq's gain of 17 percent over the same period.

Gross margins, a closely watched indicator for the company, came to 45.6 percent in the first quarter -- just above Wall Street's forecast of 43.5 percent.

I would have liked to see higher gross margin guidance, said Edward Jones analyst Bill Kreher. The stock has had heck of a run in recent weeks, so it may be time for a breather here given that visibility does remain limited.

For the second quarter, the company expects margins to remain in the mid-40s, despite speculation that Intel's drive on the Atom -- a cheaper microprocessor aimed at low-cost netbooks -- would whittle them down. Intel said it does not expect Atom to dilute gross margins and indeed should drive operating profit expansion.

We are seeing signs that a bottom in the PC market segment has been reached, Chief Executive Paul Otellini said on a conference call. I believe the worst is now behind us from an inventory correction and demand level adjustment perspective.

Order patterns strengthened throughout the quarter, with consumer sales holding up better than corporate. End markets in the United States and China showed strength while weakness persisted in Europe, Japan and emerging markets.

BIG KAHUNA

Intel, which controls 80 percent of the microprocessor market and is larger than rival Advanced Micro Devices, is a barometer of overall IT industry health.

The corporation had put out successive revenue warnings since late 2008 and warned it would be shutting or scaling down plants across Asia and the United States and trimming jobs, casting a pall over the worldwide tech industry.

On Tuesday, executives said the company had rid itself of 1,400 employees since the fourth quarter.

It reported a net profit in the first quarter ended March 28 of $647 million, or 11 cents a share, down 55 percent from $1.44 billion, or 25 cents a share, a year ago.

Analysts had expected 3 cents a share, according to Reuters Estimates. Intel's revenue fell 26 percent to $7.1 billion, versus an average estimate of $6.98 billion.

But some warned that the first-quarter earnings, while more than three times the average Wall Street forecast, had been helped by a drastically lower effective tax rate of 1 percent in the quarter, versus internal expectations of 27 percent.

That was because of the settlement of federal and state tax matters from previous years, according to the company.

The numbers were good but people were expecting stronger commentary. Instead, we got flattish expectations, said Avi Cohen, managing partner of Avian Securities.

Investors have been bullish on the chip sector of late and semiconductor counters have gone on a tear. The Philadelphia Semiconductor Index is up 30 percent since late February.

But industry executives, still shaken by one of the sector's worst downturns ever, argue that too much uncertainty remains. Also on Tuesday, fellow chip industry player Linear Technology said forecasting operating results in the current environment was difficult.

Things are no longer looking completely dark. There is light at the end of the tunnel, said Nathan Brookwood, a research fellow an Insight 64. It would be even better if people were feeling good enough about it that they could put stakes in the ground ... (with) a revenue estimate.

(Editing by Edwin Chan; Editing by Matthew Lewis, Richard Chang)

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