Companies beef up technology spending

? Companies finally appear to be muscling up their spending on the most expensive kinds of computers after slashing budgets during the recession, but fears of more economic uncertainty are proving tough for the technology industry to shake.

Intel Corp., which makes the brains for 80 percent of the world’s personal computers, turned in blowout quarterly financial numbers on Tuesday, a sign to the rest of the industry that better times are on the way.

But analysts caution that Americans are still expected to be cautious with their spending for the rest of the year. So companies may just be upgrading their technology to boost productivity, not necessarily expecting a sudden, huge increase in demand. Economic shakiness in Europe could hurt demand, too.

Intel’s results were the best in its 42-year history, including its highest revenue and profit margins ever, at a time that is historically the low point of the year for technology spending, coming ahead of the back-to-school and holiday shopping.

“I think people are going to be surprised that the technology spending budgets are robust and stable and growing,” said Doug Freedman, an analyst for Gleacher & Co.

Two other companies already say they are benefiting. Applied Materials Inc. said it expects to bring in more money from semiconductor equipment, and ASML Holding NV, a Dutch company that also makes chip equipment, said it expected record revenue this year.

Intel rival Advanced Micro Devices Inc., which reports earnings Thursday, and Nvidia Corp., which makes graphics chips and competes with both AMD and Intel, should be encouraging as well, said Craig Berger, an analyst with FBR Capital Markets.

“Intel’s results are clearly much better than feared, and indeed are much better than most investors dreamed possible,” Berger wrote in a note to clients. “We think this shows global PC demand is fairly resilient even in the face of macro-driven pressures.”

The reverberations aren’t limited to chip companies. There are positive signs for heavyweights like Apple Inc., Cisco Systems Inc., Hewlett-Packard Co. and Research in Motion Ltd., which makes the BlackBerry.

Business spending on equipment and software is an important force helping to keep the economic recovery alive.