Intel's revenue in the third quarter jumped 18 percent year-over-year, while profits also shot up over the previous year.
The world's largest chipmaker reported revenue of $11.1 billion, earning 52 cents per share and beating the analyst consensus of about 50 cents per share. This compares to $9.4 billion in revenue in the year-earlier period, or 33 cents a share.
Intel said back in August that its third-quarter revenue would be below the company's prior outlook, due to weak demand for consumer PCs, and at that time said it expected to post third-quarter revenue of about $11 billion.
Profits shot up in the third quarter to $3 billion, topping last year's third quarter of $1.9 billion and this year's prior quarter of $2.9 billion.
Gross margin, a crucial profit indicator, was 66 percent, meeting Wall Street expectations.
"Intel's third-quarter results set all-time records for revenue and operating income," said Paul Otellini, Intel president and CEO, in a statement. "These results were driven by solid demand from corporate customers, sales of our leadership products and continued growth in emerging markets," Otellini said.
"Looking forward, we...are particularly excited about our next-generation processor, code-named Sandy Bridge, and the many new designs around our Intel Atom processors in everything from the new Google TV products to a wide array of tablets based on Windows, Android, and MeeGo operating systems," he said.
During today's earnings conference call, Otellini had a lot to say about Sandy Bridge, which is expected to manifest itself in new Core i series processors. "This quarter we begin volume production of Sandy Bridge and expect to ship revenue units in Q4, as we prepare for systems' launch in the first quarter of 2011," he said.
Sandy Bridge is the culmination of a major Intel design effort to achieve a relatively high level of graphics performance and make it a standard feature in all Intel mainstream processors going forward.
"Sandy Bridge represents the largest increase in computing performance in our history," Otellini said. "Early demand from customers is much greater than we expected. And we anticipate a very fast ramp," he said.
The tablet segment was also addressed. "I know the big question on everyone's mind is how Intel will respond to new computing categories where Intel currently has no presence, specifically tablets...We will use all of the assets at our disposal to win this segment," Otellini said.
Servers, on the other hand, are showing healthy growth in certain segments, growing 200 percent year-over-year in the cloud computing segment, Otellini said.
Speaking about the PC industry more broadly, Otellini said that "2010 is not your grandfather's refresh cycle--the way we used to see in the PC industry, where people would wait for a certain combination of hardware and software and just refresh their PCs all at once. I see it as much more slow and steady."
He continued. "Low-end desktops, Netbooks...it's still kind of tough out there. We're assuming modest growth, not a double dip (recession). Most analysts for 2011 have a PC growth range...the low-end numbers are 12 [percent] and the high end numbers are in the 18 percent range. I suspect it's going to be in the middle of those at this point. And if that happens, we'll have a pretty strong year," Otellini said.
Intel third-quarter highlights:
- PC Client Group revenue up 3 percent sequentially, with record mobile microprocessor revenue.
- Data Center Group revenue was up 3 percent sequentially, with record server microprocessor revenue.
- Intel Atom microprocessor and chipset revenue of $396 million, down 4 percent sequentially.
- The average selling price for microprocessors was flat sequentially and up year-over-year.
- Gross margin was 66 percent, consistent with the company's revised expectation of 65 to 67 percent.
Intel said the outlook for the fourth quarter calls for revenue of $11.4 billion, plus or minus $400 million, and gross margin of 67 percent, plus or minus a couple percentage points.
Updated at 4:05 p.m. PDT throughout.
Correction at 4:46 p.m.: This story initially gave an incorrect figure for Intel's revenue in the third quarter of last year. Last year's Q3 revenue was $9.4 billion.