Intel outlook defies worries of PC decline

Intel Corp forecast quarterly revenue above Wall Street's expectations, defying concerns that the growing popularity of tablets and a shaky economy are eating into demand for personal computers. Intel shares moved sharply higher after the company beat earnings expectations and said developing countries like China are fueling demand and helping make up for slower growth in the United States and Europe. Intel's processors are used in 80 percent of the world's PCs but the company has failed to gain traction in increasingly popular mobile gadgets like Apple Inc's iPad and Google Inc's Android smartphones.

Intel is still very much inside

Corporate information technology spending has held up in recent quarters despite increasing economic uncertainty, helping sales of Intel's high-margin server chips. Tech companies such as Facebook are also investing heavily to build out the massive data centers. Data center sales for the world's leading chipmaker rose 15 percent in the quarter. By comparison, sales of Intel's Atom mobile chips plummeted 32 percent. "We have all these data centers out there being built, the companies aren't buying traditional servers from Dell or HP, but they are buying the chips and making their own servers," said Kevin Cassidy, an analyst at Stifel Nicolaus. Intel said revenue in the current quarter would be $14.7 billion, plus or minus $500 million. Analysts' average forecast is $14.23 billion, according to Thomson Reuters I/B/E/S. "Emerging markets are good, enterprise is strong, the mature market consumer is a little bit weaker," Chief Financial Officer Stacy Smith told Reuters.

"I'd say Europe was a little bit weaker than the U.S." Shares of Intel have risen about 11 percent this year, outperforming the Nasdaq composite index, which has been flat. Analysts recommending the company say it has been punished too much for its lag in mobile computing and point to the stock's 3.6 percent dividend yield. Intel's GAAP net income in the third quarter was $3.5 billion, up 17 percent. Earnings per share were 65 cents. Analysts on average had expected 61 cents. Intel said non-GAAP revenue in the third quarter was $14.3 billion, up 29 percent and higher than the $13.87 billion expected on average by analysts, according to Thomson Reuters I/B/E/S. Shares of Intel jumped 4.66 percent in extended trade after closing up 0.52 percent at $23.40.

Reuters