Intel rides notebook PCs, data centers to strong Q3

Intel's third quarter driven by strong enterprise demand and surprising growth in notebooks.
Written by Larry Dignan, Contributor

Chip giant Intel delivered strong third quarter results on surprising growth for notebook PCs as well as data center strength.

Intel delivered third quarter earnings of $3.5 billion, or 65 cents a share, on revenue of $14.2 billion. Non-GAAP third quarter earnings were $3.7 billion, or 69 cents a share.

Wall Street was expecting non-GAAP earnings of 61 cents a share on $13.87 billion.

As for the outlook, Intel projected fourth quarter earnings of $14.7 billion give or take $500 million. Wall Street was looking for sales of $14.3 billion in the fourth quarter.

Gross margins for the fourth quarter is expected to be 65 percent.

In a statement, Intel CEO Paul Otellini said that the company saw "double-digit unit growth in notebook PCs" and "continued strength in the data center fueled by the ongoing growth of mobile and cloud computing."

In prepared remarks, Intel CFO Stacy Smith said:

From a market standpoint, the third quarter grew in line with historical seasonal patterns and demand drivers played out similar to the first half of the year with continued strength in emerging markets and enterprise, being offset partially by slower growth in the mature market consumer segment.

By the numbers, Intel fired on most cylinders.

  • PC client group revenue in the third quarter was $9.4 billion, up 22 percent from a year ago. The disparity in Intel's results and the anemic PC growth reported by IDC and Gartner indicate that so-called white box PCs may have drove sales. Another possibility: Intel gained from a rollout of ultrabooks.
  • Data center revenue was $2.5 billion.
  • Atom chipset revenue fell 32 percent from a year ago to $269 million.
  • McAfee and Intel's mobile unit had revenue of $1.1 billion.
  • Average selling prices were flat.
  • But gross margins of 63.4 percent was below Intel projections.
  • Intel spent $4.2 billion on R&D in the third quarter.
  • Asia Pacific revenue was 557 percent of sales with Americas delivering 21 percent. Europe had 13 percent of sales with Japan coming in at 9 percent of revenue.
  • Intel has 99,900 employees.

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