Income at Intel Climbs 12% on PC Sales

SAN FRANCISCO - Intel became the world's biggest semiconductor company by powering much of our digital world. But as machine information spreads wider, Intel is struggling to stay at the center of things.

On Tuesday, Intel showed how much it remains a prisoner of its history, and how it struggles to build new product lines while continuing investment in its core strength: turning out new chips packed with almost unimaginably small transistors.

Intel reported that its net income in the third quarter rose 12 percent, to $3.3 billion, or 66 cents a share, compared with the year-ago quarter. Revenue climbed 8 percent, to $14.6 billion. For all the new business Intel is pursuing, however, chips for PCs brought in $9.2 billion of Intel's revenue, a 9 percent gain from the same quarter a year ago.

'We are pleased with the progress the company is making,' said Brian M. Krzanich, Intel's chief executive, in a statement accompanying the earnings. 'There is a lot more to do, but our results give us confidence.'

The net income was above the expectations of Wall Street analysts. They had projected Intel would make 65 cents a share, and have revenue of $14.45 billion, according to a survey conducted by Thomson Reuters.

The solid PC chip sales were not unexpected. Last week, two research firms, IDC and Gartner, issued third-quarter reports indicating that a yearslong slide in PC shipments appeared to be ending. One reason for this was that businesses have been buying new computers because Microsoft earlier this year discontinued servicing an older operating system. In addition, sales of tablet computers, which were seen as alternatives to PCs, have leveled off.

'On PCs, they are subjects of the market: Corporations are refreshing their machines while consumers are constrained,' said Bill Kreher, an analyst with Edward Jones. 'Intel is trying to make their own luck with smartphones, and it's tough. They pushed strong to get into tablets, just as that market started to mature.'

As tough a slog as Intel faced, 'they're committed, and they've got a huge war chest,' he added. 'You've got to applaud their long-term perspective - they've been trying to succeed in mobile since the iPad came out.' Apple introduced its iPad tablet in April 2010.

Intel, founded in 1968, became dominant in the decades when personal computers and computer servers became standard goods for consumers and businesses. Now, however, computing is found on appliances, watches, smartphones, tablets and many other devices where Intel does not yet play a significant role.

Mr. Krzanich, who became chief executive last year, has vowed to fix that and compete in the new markets.

Another area of focus for Intel is chips for computer servers in data centers, which increasingly coordinate the data coming in from remote computers. Data center sales were up 16 percent year over year, to $3.7 billion. The mobile group's revenue was just $1 million, Intel said.

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