Intel forecast challenges PC decline fears

Intel's quarterly revenue forecast has beaten expectations, showing consumer demand for personal computers remains strong.

Chipmaker Intel says that developing countries like China are fuelling expansion which has balanced out slower growth in the United States and Europe.

"Guidance is well above consensus estimates, but below seasonality," said Patrick Wang, an analyst at Evercore Partners.

"They are giving us a realistic look at the fourth quarter and it seems like they are guiding conservatively."

Intel processors are used in 80 per cent of the world's PCs but the company has failed to gain traction in increasingly popular mobile gadgets like Google's Android smartphones and Apple's iPad, which some people are buying instead of laptops.

Chief Financial Officer Stacy Smith said Intel's outlook was a little lower than normal for this time of year, mostly due to weakness in Europe's economy.

Corporate information technology spending has held up, boosting sales of Intel's high-margin server chips.

Tech companies such as Facebook are also investing heavily to build out their computing capacity, helping data centre sales for the world's leading chipmaker rise 15 per cent in the quarter.

"Emerging markets are good, enterprise is strong, the mature market consumer is a little bit weaker," Smith said.

"I'd say Europe was a little bit weaker than the U.S."

In the third quarter, sales of Intel's Atom mobile chips plummeted 32 per cent, reflecting consumers' growing preference for tablets over netbook PCs the Atom chips are widely used in.

Intel is rushing to develop more energy efficient chips for tablets and phones although it is not expected to become competitive in mobile computing in the near future.

It is also promoting Ultrabooks, a new super-thin category of laptops using Intel processors - similar to Apple's MacBook Air.

Early Ultrabook models, meant to combine the best features of tablets and laptops, may seem expensive to consumers, analysts say.

As new features are added to them, such as touchscreens and "instant on" capability, Intel expects the Ultrabooks to account for 40 per cent of the consumer PC market by the end of next year.

Chief Executive Paul Otellini told analysts on a conference call that the potential release of Microsoft's upcoming Windows 8 operating system next year could fuel higher PC sales and help Intel.

Intel said revenue in the current quarter would be $14.7 billion, plus or minus $500m.

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