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Intel shifts revenue forecast upward

Notebook sales prompt the chipmaker to raise its revenue expectations for the third quarter in a row.

Intel raised its revenue estimates for the second quarter, thanks to notebooks.

The Santa Clara, Calif.-based company said Thursday that it expects revenue for the second quarter, which ends July 2, to be between $9.1 billion and $9.3 billion, higher than its earlier forecast. Intel in April stated that revenue for the second quarter would come in at between $8.6 billion and $9.2 billion.

The increase stems from notebook sales, the company said. Earlier, consulting firm Current Analysis noted that notebook sales surpassed desktop sales in U.S. retail in May, a first. Demand, in fact, has been some strong that shortages of some chipsets and other components have emerged.

"Demand feels pretty good right now. It's pretty simple," CFO Andy Bryant said during a conference call. "The factories are pretty full."

Gross margins, or the percentage of money left over after expenses, will come to approximately 57 percent, higher than the earlier prediction of 56 percent. Income from investments, which will likely be closer to $100 million than the $70 million expected earlier, will also contribute to the higher estimates.

The announcement will likely buoy investors and prompt analysts to revise estimates upward. Before the official midquarter update, the consensus opinion among Wall Street analysts was that revenue would hit $8.99 billion, a bit higher than the midpoint of Intel's revenue projection, while earnings per share would come to 27 cents for the second quarter.

Earlier in the week, Apple Computer announced that it would start to incorporate Intel microprocessors in its PCs, but those PCs won't come out for another year.

Intel has now raised revenue expectations in its midquarter updates three times in a row.

Revenue for the first quarter came to $9.4 billion, a 17 percent jump over the year-earlier period, and higher than originally forecast. Net income came to $2.2 billion or 34 cents a share, a 31 percent increase over the 26 cents a share recorded for the same period a year earlier.

"As of today, worldwide demand seems pretty solid," Andy Bryant, Intel's chief financial officer, said in a conference call in April.

Intel rival Advanced Micro Devices will likely discuss its future plans and current financial picture at an analysts' meeting on Friday in New York. Among the anticipated topics are AMD's progress in the server market and its plans for notebooks. Although it has gained share in the server market, AMD has lagged in response to Intel notebook products such as Centrino.

Analysts will also ask about the pending spin-off of Spansion, a flash memory company largely controlled by AMD. Losses in flash memory and product delays have dented AMD's quarterly results for the last six months.