SANTA CLARA, Calif. (
) -- Investors will be scrutinizing
third-quarter results after market close Tuesday to see whether its prediction of a rebounding PC market comes true.
When Intel reported its second-quarter results in July, the chip giant enjoyed its strongest sequential growth since 1988, and CEO Paul Otellini confidently predicted an improvement in the PC market. With the third quarter coinciding with the new school year, and the holiday season looming on the horizon, Otellini forecast a "seasonally stronger second half."
Despite the lingering
felt in much of the broader economy, the Intel chief subsequently predicted that PC sales could even grow this year.
As the world's largest chipmaker, Intel is seen as a bellwether for the broader tech sector, hence heightened levels of interest in its numbers. Intel's Atom chip, in particular, is expected to reap the benefits of the
, and the company is clearly anticipating a major
Research firm Gartner, for example, recently reported that the worst of the recession may be
for PC makers. Worldwide
shipments are now forecast to reach 25 million units in 2009, up from Gartner's initial projection of 21 million.
was nonetheless hit by
PC sales in its recent
. The firm's Personal Systems Group saw its sales dip 18% compared to the prior year, suggesting that PC makers are not out of the woods.
With some concern that Intel's customers have been
depleted inventory, as opposed to actually meeting new end-user demand, investors will be keen to hear Otellini's comments when the third-quarter results are released.
Intel, which has recently been branching out from its core microprocessor business into
, has forecast third-quarter sales between $8.8 billion and $9.2 billion and a gross profit margin between 53% and 55%.
Analysts surveyed by Thomson Reuters expect Intel to post revenue of $9.02 billion and earnings of 27 cents a share, although this should be viewed against the backdrop of a still-recovering economy. The company, for example, enjoyed record third-quarter revenue of $10.2 billion prior to last year's global economic collapse.
Although PCs conjure up images of consumers, a massive chunk of Intel's revenue comes from selling its wares to businesses. The firm's Digital Enterprise Group, which encompasses products for desktop computers, servers, workstations and storage, brought in $4.3 billion in the second quarter, up 7% sequentially.
Intel's Mobility Group, which builds microprocessors and chipsets for notebooks, netbooks and
, grew its sales 20% sequentially, bringing in $3.5 billion. Otellini will be keen to maintain this revenue momentum.
Shares of Intel, which competes with
, rose 14 cents, or 0.69%, to $20.54 in pre-market trading.
-- Reported by James Rogers in New York