Intel’s Q3 Results: PC And Cloud Growth, Atom Market Continues To Shrink

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Intel has released their Q3 financials, and for the most part it’s good news for their investors. Their revenue (GAAP) was a record $14.2bn, up $3.1bn from last year’s Q3. Gross margin is down by 2.6%, but net and operating income are both up quite a deal, $3.5bn (16%) and $4.8bn (17%) respectively. Their CFO reports that it was their most profitable quarter ever.

The source of this prosperity is, according to intel, “double-digit growth in notebook PCs” and “strength in the data center fueled by the ongoing growth of mobile and cloud computing.”

The PC Client group saw a 22% increase in revenue to $9.4bn, attributable to the growth in notebook PCs, many of which sported Intel’s new Sandy Bridge Core processors. Their biggest competitor in this space, AMD, only last week released their response to Sandy Bridge, and in addition to being late to market it is reported to be under-performing compared to Intel’s line. So growth in this area is likely to continue unabated for the time being, apart from erosion of the PC market by tablets, phones, etc.

Intel’s Data Center Group is up $2.5 billion in revenue, a 15% increase, though competition here is likely greater and margins smaller per processor. The field itself is growing quickly, however, and for every smartphone Intel isn’t powering, there’s a new server they are powering.

But all is not well in Santa Clara: their Atom group is down 32% to $269mn, a tiny fraction of what it was during the netbook rush of 2009 and 2010. And of course no data is reported for mobile chipsets (other than wireless chips for WiMax and so on), because Intel has almost literally no presence in that sector. CEO Paul Otellini has said on the record, however, that they intend to bring x86 to phones in 2012. Whether that’s part of their intended $4.3bn in R&D spending isn’t clear — and anyway, that wouldn’t include the cost of the sweetheart deals they’d have to cut with handset makers.

One little piece of trivia: they’ve added around 3400 employees this quarter, bringing them to almost exactly 100,000. Congratulations to Intel on this milestone.

The rest of the results, along with commentary and extra information, can be found here at Intel’s Investor Relations page.