Strong Intel Numbers Signal Hope for IT Industry - Page 2

Fiering said many business executives have indicated to Gartner that they plan to upgrade to Windows 7, but through attrition as they upgrade their hardware, rather than by proactively buying new systems to get the operating system.

And the PC space continues to struggle. Research company iSuppli announced July 14 that in 2009, for the first time since the dot-com bust in 2001, the PC industry will see a contraction in the number of units shipped, thanks both to the drop in IT spending and to the sharp decline in desktop purchases.

Intel's earnings also come as reports surface that the chip maker may release its upcoming "Nehalem EX" chips for servers with four sockets as early as August, and that it is preparing the release of three new Core i7 "Lynnfield" processors for PCs.

Otellini also said during the conference call that Intel will continue with its aggressive push to expand into new areas beyond traditional PCs and servers, including into the embedded market, mobile devices and software.

Intel is in the process of buying embedded software maker Wind River for $884 million, and is continuing to see success with its year-old Intel Atom processor in the burgeoning netbook market and other areas. For the second quarter, revenue from Atom was $362 million, a 65 percent increase over the first quarter.

Fiering said Intel is smart to expand its reach. Executives there understand that the market is changing, and that the younger generation will use smartphones to do what older folks have traditionally used PCs for, Fiering said.

Looking forward, Intel executives said they expect revenue in the third quarter to be about $8.5 billion.