Forget the death of the PC: Intel’s profit jumps 17%

Intel posted quarterly profit leapt 17%, defying concerns that tablets and a shaky economy are eating into demand for computers.

It wasn’t all good news, as in the third quarter, sales of Intel’s Atom mobile chips plummeted 32%, reflecting consumers’ growing preference for tablets over netbook PCs the Atom chips are widely used in.

Intel said revenue in the current quarter would be $14.7 billion, topping forecasts of $14.23 billion. Intel said non-GAAP revenue in the third quarter was $14.3 billion, up 29%. The company’s GAAP net income in the third quarter was $3.5 billion, up 17%.

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

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

Corporate information technology spending has held up in recent quarters despite the lackluster economy, helping 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 center sales for the world’s leading chipmaker rise 15% in the quarter.

“Emerging markets are good, enterprise is strong, the mature market consumer is a little bit weaker,” Smith told Reuters. “I’d say Europe was a little bit weaker than the US.”

Future plans

Intel is rushing to develop more energy efficient chips for tablets and phones although it is not expected to become competitive in mobile any time soon.

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. But as new features are added to them, such as touchscreens and “instant on” capability, Intel expects the Ultrabooks to account for 40% 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.