Intel Soars on Improved PC Sales, Predicts Bonanza Fourth Quarter

Microprocessor giant Intel signaled this morning that the PC bust was over as it delivered a record number of microprocessors and record quarterly revenues. Intel reported net income of $3.3 billion on revenues of $14.6 billion. More important, the firm for the first time delivered over 100 million microprocessors in a quarter. And it says the next quarter will see further improvements.

"We are pleased by the progress the company is making," Intel CEO Brian Krzanich says in a prepared statement. "We achieved our best-ever revenue and strong profits in the third quarter.  There is more to do, but our results give us confidence that we're successfully executing to our strategy of extending our products across a broad range of exciting new markets."

That strategy isn't driving revenues today, however. Intel's PC group delivered fully two-thirds of the firm's revenues, at $9.2 billion, a 9 percent jump, year-over-year. But the best news for the business is that PC-based microprocessor sales were up overall by 15 percent year-over-year. And sales of chips for portable PCs were up a dramatic 21 percent.

"The worldwide PC supply chain appears to be healthy, with inventory levels appropriate in anticipation of the fourth quarter retail cycles," an Intel representative said.

Server chip sales and other data center group revenues came in at $3.7 billion, up 16 percent year-over-year. Intel's remaining businesses—which address those new markets mentioned by Krzanich—remaining tiny, however: Internet of Things group revenue totaled just $530 million, followed by software and services at $558 million.

But mobile devices continue to be a sore spot. Intel's mobile and communications group barely registered in the quarter, delivering only $1 million (yes, million with an "m"), a figure Intel said was "consistent with expectations." The group had an operating loss of over $1 billion.

Well, thank goodness for the PC.

In that market, Intel is benefitting from a number of trends in the PC market, but the most obvious one is thankfully cyclical: Consumers and especially businesses are now starting to upgrade their PCs after a few years of indecision caused largely by Windows 8. Krzanich also says that Intel's low-end PC chips like the Atom are "winning against tablets."

But Intel also seeks to grow its chip sales in non-traditional PC markets for tablets and smart phones. And while the firm continues to struggle with smart phones in particular, it says that it is on track to meet an internal goal of selling 40 million microprocessors for tablets in 2014.

"Our strategy is working," Mr. Krzanich said during a conference call with analysts and press. He noted that today's PCs were "thin, lightweight and have touch screens," and offer designs that were not possible two years ago when Windows 8 first launched.