Oct. 14 (Bloomberg) -- Intel Corp. posted higher-than- anticipated third-quarter profit and said sales may rise in this period on demand for laptops, easing concern that the credit meltdown will curb orders and sending the shares higher.

Net income climbed 12 percent to $2.01 billion, or 35 cents a share, from $1.79 billion, or 30 cents, a year earlier, the Santa Clara, California-based company said today in a statement. Revenue rose 1.3 percent to $10.2 billion. Analysts had projected a profit of 34 cents on average, according to a Bloomberg survey.

Intel, the world's largest chipmaker, alleviated concern that the crisis hitting the world's banking system will halt demand for personal computers. While corporate PC sales have slowed, revenue from laptop processors, which sell for more than desktop chips, jumped 20 percent last quarter.

``The results were excellent,'' said Michael Shinnick, a portfolio manager at 1st Source Bank in South Bend, Indiana, which owns Intel shares. ``It should reassure people that PC demand did not fall off a cliff during the third quarter.''

Fourth-quarter sales will be $10.1 billion to $10.9 billion, Intel said. Gross margin, the percentage of sales remaining after deducting production costs, will be about 59 percent. Analysts in the Bloomberg survey had predicted sales of about $10.8 billion. Craig Berger, a New York-based analyst for Friedman, Billings, Ramsey Group Inc., projected a margin of 59.3 percent.

Intel rose 71 cents, or 4.5 percent, to $16.64 in late trading after closing at $15.93 on the Nasdaq Stock Market.

Economic Questions

Uncertainty about the economy and tighter credit may prompt consumers and businesses to put off purchases, Intel said. Because of the risks, the company plans to provide a mid-quarter update on its progress Dec. 4.

Chief Executive Officer Paul Otellini said he's seeing mixed signals in the market for PCs. He expects ``softness'' in corporate sales to continue in the fourth quarter.

``It's clear that the financial crisis is creating some signs of stress that may impact our business,'' he said on a conference call with analysts. ``Consumer traffic has been light'' this quarter so far, he said.

Intel's sales forecast range reflected the unpredictability of demand for PCs in the credit crisis, said Chief Financial Officer Stacy Smith. It was the widest sales forecast range that Intel has ever given.

``As the credit issues unfold, there's a much wider range of potential end demand in the forth quarter than we would normally see,'' he said. ``So we've set a wider range than normal.''

Efficiency Boost

Third-quarter profit was higher than expected because the company was able to run its plants more efficiently, Smith said.

Intel is the first major technology business to give a full earnings report for last quarter, kicking off two weeks of announcements by companies, including Microsoft Corp. and Google Inc. Intel's processors are the key component of more than three- quarters of the world's PCs, making its financial performance an indicator of global demand for technology.

Corporate spending on computers, software and communications will fall as much as 5 percent next year, according to Jane Snorek, an analyst at First American Funds in Minneapolis. Intel and other technology shares have plummeted this year on concern that a budget freeze will stifle earnings growth.

Atom Chips

Otellini, 58, has sought to maintain demand by introducing a new line of chips called Atom this year. The chips run computers called netbooks and nettops. The devices, which cost as little as $250, are designed for basic functions such as surfing the Web.

Friedman's Berger is concerned that the success of Atom may come at the expense of profitability.

``I don't like the Atom,'' said Berger, who has an ``outperform'' rating on the shares and doesn't own them. ``It gives customers the opportunity to go from spending $60 or $80 a chip to spending $35 a chip.''

Intel's 40 percent plunge this year has made the stock seem cheap for some investors. They're betting that the company's international focus -- more than 80 percent of sales come from outside the U.S. -- will help it withstand a recession.

``I want to buy industry leaders that have lots of cash, rock solid balance sheets and global exposure,'' Frederic Dickson, who helps oversee $25 billion in assets as chief market strategist at D.A. Davidson & Co. in Oswego Lake, Oregon, said in a Bloomberg Television interview. ``When we can buy it at 2003 levels, we really like it.''

Intel's gross margin was 58.9 percent last quarter, compared with its forecast of about 58 percent. The margin is the only profit measure that Intel projects. Friedman's Berger estimated 58 percent for the third quarter.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

Last Updated: October 14, 2008 19:31 EDT