Intel Corp, the world's largest microchip maker, crushed Wall Street forecasts with a 875 per cent jump (almost a nine-fold increase) in 2009 fourth quarter net income which hit $2.3 billion when compared to $234 million the previous year.

Announcing the results on Thursday, the California-based company said the company's revenue during the final quarter of 2009 soared 28 per cent to hit $10.6 billion from $8.2 billion.

The spectacular results gave a bullish margin outlook on higher prices and firm demand for server chips, reinforcing hopes for a strong recovery in technology, said it's president and CEO Paul Otellini.

'Intel's strong 2009 results reflect our investment in industry-leading manufacturing and product innovation. We had an outstanding quarter and enter 2010 in a very strong position,' Otellini said, adding that corporate spending should return 'modestly in 2010.'

'What we are benefiting from in the second half of the year, and what we'll continue to benefit from throughout this year, is the extraordinary return on investment that is incurred by deploying new server technologies,' he added.

Intel, whose stock extended gains after rising 2.5 per cent in regular trading, said on Thursday its gross profit margin in the fourth quarter rose to a record 65 per cent.

While it forecast a drop to 59 per cent to 63 per cent in the typically weaker current quarter, that still surpassed analysts' average projection of 58.8 per cent.

'That will alleviate a lot of the concerns people had over whether the surge in buying at the end of the year was one that was going to peter out,' said FTN Equity Capital Markets analyst Joanne Feeney. 'That will have a positive spillover to other stocks' on Friday.

Some technology stocks rallied after-hours on the news. Intel chip rival Advanced Micro Devices gained 1.7 per cent, while Microsoft climbed nearly 1 per cent. Japan's Nikkei average hit a 15-month high, lifted by tech shares such as chip equipment supplier Advantest.

Many analysts predict a return of corporate spending in the second half of 2010 that would lift the tech sector out of its worst downturn in decades. Some say new spending has already begun.

'The big picture is that tech remains investable,' said Wedbush Morgan's Patrick Wang. 'They're giving us reassurance that the PC sector remains intact and more importantly, that we're seeing incremental improvements in the economy and that we're probably well on our way to recovery.'

'What they did on the gross margin line was extremely impressive, which was due to the massive upside in revenue.'

Intel said average selling prices of its microprocessors rose from the third quarter, driving a 21 percent revenue increase in its data center business which makes server chips, and a 10 percent revenue rise in its PC business.

Despite the blowout quarter, shares of the world's largest microchip maker were up just less than 1 percent in extended trading, after rallying 7 percent in the past two weeks.

The stock initially rose as much as 2.1 percent to $21.94 after Intel reported earnings.

'People had real high expectations going into this quarter. So they may be looking for other ways to play this positive move besides Intel,' said Robert Burleson, analyst at Canaccord Adams, recommending other chip names such as AMD.

Intel's chief financial officer, Stacy Smith, also told analysts the company plans to do 'a little bit' of hiring for some research and development projects.

Intel said its employee ranks shrank by about 1,000 in the fourth quarter, leaving it with 79,800 workers, its lowest total since 2003.

On an annual basis, Intel's 2009 revenue was about $35 billion, down from $37.6 billion in 2008. Profit for 2009 was $4.4 billion, down from $5.3 billion in 2008.