But investors, accustomed to Intel's beating forecasts, sold the company's stock, which had rallied 17 percent this year, following the news.
Shaky economies in Europe and the United States, a growing consumer preference for tablets, and a recent shortage of hard drives due to flooding in Thailand have taken a toll on the PC industry.
Still, demand in China and other emerging economies has helped sustain PC growth, and Intel's server business has been a winner from the buildout of servers behind the Internet and data consumed on smartphones.
"Given the topline is slightly better than expected, it doesn't seem like there's a meaningful impact from tablets right now. The PC market is holding up pretty well," said Srini Pajjuri, an analyst at CLSA.
Despite weakness in the United States, global PC shipments in the first quarter grew 1.9 percent from the year-ago period, research firm Gartner said last week. That was better than the firm's previous forecast of a 1.2 percent decline.
Hoping to safeguard its position in PCs, Intel is heavily promoting a new class of instant-on, super-thin laptops dubbed "ultrabooks" that it hopes can stand up to the likes of Apple Inc's Macbook Air, with some of the technological chic the iPad and other tablets epitomize.
An upcoming launch of Intel's newest PC processor, called Ivy Bridge, is expected to boost the company's sales later this year, as is the launch of Microsoft Corp's Windows 8 operating system later in 2012.
Intel has struggled to find a foothold in smartphones and tablets, where processors based on ARM Holdings' power-efficient chip designs are widely used.
But Intel has recently shown some encouraging signs with announcements that its newest processors would be used in a handful of upcoming smartphones.
Many investors are waiting to see how successful the new handsets become with consumers before declaring the chipmaker a serious player in the mobile market. But growing expectations that Intel will be able to compete in mobile have fueled some of the gain in its shares in recent months.
The long-time technology bellwether said revenue in the current quarter would be $13.6 billion, plus or minus $500 million. Analysts on average had expected $13.45 billion, according to Thomson Reuters I/B/E/S.
Ahead of Intel's earnings report, some analysts said they were optimistic the company would beat their own estimates.
UPCOMING CHIPS
Intel's stock trades at 11 times earnings, after a 17 percent gain so far this year.
The long-awaited Windows 8 is expected to cause a jump in PC sales, but the operating system will be Microsoft's first version of Windows that is compatible with chips designed by ARM Holdings, a rival of Intel.
Intel could face new competition in low-end PCs from companies like Nvidia Corp and Qualcomm.
The world's leading chipmaker said revenue in the first quarter was $12.9 billion, up from $12.85 billion in the year-ago period and a bit higher than the $12.85 billion expected.
GAAP net income in the first quarter was $2.74 billion, down from $3.16 billion in the year-ago period.
GAAP earnings per share were 53 cents, better than the 50 cents expected.
Intel said non-GAAP gross margins in the second quarter would be 63 percent, plus or minus 2 percentage points.
Despite the relatively upbeat outlook, shares of Intel fell 2.81 percent in extended trade after closing up 0.23 percent at $28.47 on Nasdaq.
(Reporting By Noel Randewich; Editing by Richard Chang)
Reuters