Intel Narrows Revenue ForecastIntel Narrows Revenue Forecast

Intel expects to end its third quarter at the high end of its earlier revenue expectations on the strength of its Intel Architecture Group and despite continued weakness in the communications industry, the company said Thursday.

Revenue for the quarter will range from $7.6 billion to $7.8 billion, the company said in updating its expectations. On Aug. 22, Intel raised its revenue forecast to between $7.3 billion and $7.8 billion from an earlier target of $6.9 billion to $7.5 billion. At the time, the company cited stronger than expected demand for its microprocessors, the brains of computers.

The Architecture Group oversees development of microprocessors, chipsets, motherboards, systems, and related software that go into servers, PCs, and other platforms.

With just a few weeks to go before the end of the quarter, the fact that Intel is able to predict a significant quarter indicates some strength in the PC market, says Gartner fellow Martin Reynolds. "We're a little nervous about this," he adds, "but this could be a sign of the recovery we've been expecting for years."

When Intel says it's seeing strength in its Architecture business, it's a sign of strong PC spending in the market because that area of the company derives two-thirds of its revenue and half of its profits from the PC business, says Nathan Brookwood, principal analyst for analyst and research firm Insight64. Intel has high expectations for its Architecture business in the fourth quarter when it releases Prescott, a faster-performing, lower-power version of Pentium. "They never rest on their laurels," Brookwood says. "That's one of the problems with being a competitor to Intel."