Intel raises outlook on PC sales optimism

Chipmaker says demand for microchips will be better than expected in the current quarter. Raises sales and gross margin estimates.

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By David Goldman, CNNMoney.com staff writer

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Intel said demand for chips and processors is turning out to be stronger than it previously expected.
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NEW YORK (CNNMoney.com) -- Microchip king Intel boosted its sales outlook for the current quarter on Friday, signaling an end to the deep PC market swoon.

The company raised its third-quarter revenue expectations to a range between $8.8 billion and $9.2 billion from a range of $8.1 billion to $8.9 billion. The new estimates trump Wall Street's revenue forecasts for the current quarter of $8.6 billion, according to a Thomson Reuters survey of analysts.

Intel also said its gross margin will be in the "upper range" of its previous guidance of 51% to 55%. Analysts currently expect gross margin of 53.2%.

The tech bellwether said it expected demand for microprocessors and chipsets would be stronger than it had previously expected in the current quarter. That's largely due to the PC market, which Intel last month said has started to bounce back sharply.

PC sales were expected to rebound this year, but not until the fourth quarter, when Microsoft's (MSFT, Fortune 500) Windows 7 is set for release. But a recent Gartner study showed that computer sales are already showing signs of improvement. Apple (AAPL, Fortune 500) released its new Snow Leopard operating system Friday, which could boost Mac sales somewhat this quarter.

Intel already pleasantly surprised analysts last month when its second-quarter sales and profit easily beat Wall Street's expectations. In its July 14 announcement, the company said it was very upbeat about the future, and its guidance blew past analysts' long-term forecasts.

A spokesman for Intel was not immediately available for comment.

Shares of Intel (INTC, Fortune 500) rose 4% in morning trading. To top of page

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