Intel officials in August warned the industry that weakening consumer PC sales in the third quarter threatened what had been an extremely strong year for Intel and its competitors.
However, corporate spending on technology helped Intel grow revenues to $11.1 billion, the first time they had reached the $11 billion mark. Revenues grew 18 percent over the same period last year, while earnings rose from $1.86 billion in the third quarter of 2009 to $2.96 billion.
In a conference call with analysts and journalists Oct. 12, both Intel CEO Paul Otellini and CFO Stacy Smith said that while consumer demand in the United States and Europe continued to be weak, corporate spending grew, as did demand in emerging markets.
The reduced demand among consumers led other chip makers-Advanced Micro Devices and Texas Instruments among them-to lower third-quarter expectations. AMD is scheduled to release its quarterly earnings Oct. 14.
Despite the weakened consumer spending, Intel's numbers from the third quarter continued a string of record-setting quarters, fueled by sales in both its traditional PC and server processor businesses as well as the company's growing initiatives in new areas such as embedded systems and mobile devices.
Intel officials expect that trend to continue. They expect revenue to come in around $11.4 billion, give or take $400 million. Otellini was particularly high on the potential of Intel's upcoming "Sandy Bridge" processor, a 32-nanometer chip that offers integrated graphics, about 1 billion transistors and a throughput rate that is five times faster than current chips.
Otellini and Smith said early demand for the processor-which is scheduled to appear in systems in early 2011-has been good. Sandy Bridge represents "the largest increase in computing performance in our history," he said during the call. "Early demand is much higher than anticipated."
Otellini also gave his strongest statements yet regarding the growing tablet PC market and how he sees Intel's role in it playing out.
While tablets may take some business away from the "edge" notebook market, he said, both the tablet and the notebook markets will continue growing at healthy paces. He noted a similar trend when netbooks hit the market for the first time three years ago.
He also said he expects Intel's Atom platform-particularly the upcoming "Oak Trail" chip-to help drive the adoption of the Intel Architecture in tablets and other small form factors.
In addition, he and Smith talked about the strength of the Atom platform in the embedded market, most recently in its use in the Google TV offering.
"Smart TVs are an example of how Intel Architecture can bring a great computing experience not just in PCs but in any device that connects to the Internet," Otellini said.