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Intel revenue tops $14 billion for first time

Profits surged, too, for the world's largest chipmaker, which credited "double-digit unit growth in notebook PCs" along with continued strength on the data center side.

Intel's revenue in the third quarter jumped 28 percent year over year, while profits also shot up over the previous year.

The world's largest chipmaker reported revenue of $14.2 billion on a GAAP (generally accepted accounting principles) basis, on GAAP earnings of 65 cents per share. Adjusted income was 69 cents per share. This compares to $11.1 billion in revenue in the year-earlier period, or 52 cents a share.

Intel was expected to report earnings of 61 cents a share, on revenue of $13.9 billion, according to an analysts' consensus.

The chipmaker surpassed $14 billion in revenue for the first time, with the growth "driven largely by double-digit unit growth in notebook PCs," said Paul Otellini, Intel president and CEO, in a statement. "We also saw continued strength in the data center fueled by the ongoing growth of mobile and cloud computing."

Net income was $3.5 billion (GAAP), up $513 million, a 17 percent year-over-year increase.

Ultrabooks: Intel CEO Paul Otellini commented on Ultrabooks, which are ultrathin Windows laptops that compete with Apple's MacBook Air. "This is just the beginning...touch screens, always on, always connected, all at mainstream price points. 70 designs in the pipeline," Otellini said during the earnings conference call this afternoon.

Otellini also reiterated that Intel-based smartphones will appear in the first half of next year.

ARM: Chief Financial Officer Stacy Smith also commented on competition from ARM processor rivals (competitors include Texas Instruments, Qualcomm, and Nvidia) in the low-end PC market. "We hear about this a lot. How are you going to win against $30 ARM processors with $100 [Intel] processors?" he asked during the conference call. "We're already at the low end of the market with $30 processors. We still win the lion's share of that market. And AMD is even at lower prices," he said.

Windows 8: Otellini said Intel is not a player in the tablet market. But with Windows 8 Intel can participate in that market and therefore compete effectively with ARM. He also mentioned that historically a new release of Windows has benefited Intel significantly.

Highlights for the quarter, which ended October 1:

  • Gross margin was 63.4 percent, 0.6 percent below the midpoint of the company's expectation.
  • PC Client Group revenue was $9.4 billion, up 22 percent year over year.
  • Data Center Group revenue was $2.5 billion, up 15 percent.
  • Other Intel architecture group revenue was 68 percent.
  • Intel Atom processor and chipset revenue was $269 million, down 32 percent.

The outlook for the fourth quarter is for revenue of $14.7 billion, plus or minus $500 million, on both a GAAP and non-GAAP basis. Gross margin percentage: 65 percent, plus or minus a couple of percentage points.

Updated at 3:10 p.m. PDT: Added Ultrabook, ARM, Windows 8 comments.