SAN FRANCISCO—One year after a perfect storm-type financial crisis created the mother of all semiconductor industry downturns, the world's No. 1 chip maker is once again sitting pretty.

Thanks to a surprising rebound in the PC market, Intel Corp. on Tuesday (Oct. 13) exceeded analyst expectations with its third-quarter results and a fourth-quarter sales target that, if accurate, would put the company essentially back to the same quarterly run rate it had before all hell broke loose.

The mid-point of Intel's fourth-quarter sales target is $10.1 billion, in the same well-to-do neighborhood as the $10.2 billion Intel reported for the third quarter of 2008. (For the record, fourth-quarter sales of $10.1 billion would represent a 23 percent increase over $8.2 billion in the fourth quarter of last year, after the financial crisis arrived in earnest, but would be off almost 6 percent compared to the $10.7 billion Intel pulled down in the fourth quarter of 2007.)

Intel (Santa Clara, Calif.) also surprised analysts by projecting that fourth-quarter gross margins would be between 59 and 65 percent. Stacy Smith, Intel's chief financial officer, said he continues to believe that the company's long-term gross margins will be between 50 to 60 percent. He attributed Intel's current strength to the combination of a recovering market, company execution and the success of its product portfolio.

Paul Otellini Intel President and CEO

Smith said Intel expects capacity utilization in the fourth quarter to be between 80 and 90 percent. Craig Berger, an analyst with FBR Capital Markets, said in a research note that this means the company still has headroom to ramp revenues to $11.5 billion should demand exist.

Intel executives also acknowledged that the company owes its good fortunes primarily to the astonishing recovery of the PC market and, to a lesser extent, the fact that notebook systems are now outselling desktops. Intel President and CEO Paul Otellini said the company now expects 2009 PC volume to be flat to up slightly compared with 2008, a significant change from the industry's views six months ago.

"I think you are seeing, inside of that, Intel do well because of the shift to notebooks, where we enjoy a higher market segment share than we do in desktops," Otellini said.

Market research firm iSuppli continues to predict that 2009 PC unit shipments will be down 4 percent compared to last year. ISuppli estimates that Intel held 80.6 percent of global microprocessor market share as of the second quarter.