“We’re extremely pleased to have Doug join the Intel team,” said Intel CEO Paul Otellini. “His breadth of experience and legal expertise combined with his background in government are an outstanding fit for us.”

Melamed’s appointment must be quite a relief for Otellini and Intel, which, as I’ve noted here before, is grappling with some of the most important legal issues the company has ever faced.

Posting third-quarter results Tuesday, Intel (INTC) said it earned 35 cents a share on revenue of $9.39 billion. That’s not quite what the company reported during the same period last year, when it saw earnings of 35 cents a share on revenue of $10.2 billion. But it’s much better than investors had been hoping for. Analysts had expected Intel to report earnings of 28 cents a share on revenue of $9 billion, according to a consensus survey by FactSet Research.

Not bad. Even better, the company bumped up its fourth-quarter guidance from sales of $9.7 billion to sales $10.6 billion. Consensus estimates have been calling for sales of $9.5 billion, according to FactSet Research data.

Intel’s rosier Q4 guidance suggests that the slow increase in end-market demand for PCs we’ve been seeing lately isn’t simply inventory refill but reflects an upswing in demand for end-customer goods. Perhaps that turnaround CEO Paul Otellini has been heralding for the last half year is not as far off as it might seem.

“Intel’s strong third-quarter results underscore that computing is essential to people’s lives, proving the importance of technology innovation in leading an economic recovery,” Intel CEO Paul Otellini said in an earnings release. “This momentum in the current economic climate, plus our product leadership, gives us confidence about our business prospects going forward.”

“The worst is now behind us.”

– Intel CEO Paul Otellini, April 14, 2009

Looks like the worst is once again behind us. In remarks at the Intel Developer Forum on Tuesday, Intel (INTC) CEO Paul Otellini said the PC industry is headed for recovery, albeit slowly. Evidently, chip shipments are stablizing as PC shipments begin to pick up.

“This is an environment where we have had the worst recession in 70 years,” Otellini said. “The market is poised for a resurgence and we will see how 2010 plays out.”

And what, exactly, does that mean? Otellini says that he “personally” is betting that the PC industry sales volume will at least match what we saw in 2008. They’ll wind up “flat to slightly up,” he said.

The move, which will be effective immediately upon its announcement, is quite a blow for Intel (INTC). Gelsinger had done stints as the company’s chief technology officer and as head of its research division. He helped quarterback Intel’s 386 and 486 processors, played a major role in the launch of Nehalem and had been considered a likely successor to Intel CEO Paul Otellini. Now he’s a contender for the top job at EMC (EMC) when CEO Joe Tucci decides to step down.

Oh, this was AMD’s 11th quarterly loss in a row.

So nothing much to get excited about here. Or in the company’s guidance. “Considering current macroeconomic conditions, limited visibility and historical seasonal patterns, AMD expects its Product Company revenue to be up slightly for the third quarter of 2009,” AMD CEO Dirk Meyer said in a statement. “New platform, microprocessor and graphics introductions planned for the second half of 2009 position us well to improve margins and meet our financial goals for the year.”

AMD shares were down more than 11 percent to $3.60 in after-hours trading.

Three months after Intel CEO Paul Otellini announced that the PC market had reached bottom, the company’s latest financials, which handily beat expectations, seem to have proven him right. “The worst is now behind us,” he said. And the tech economy is showing signs of muted recovery.

The question is: Is that recovery sustainable?

The answer, according to Otellini, is yes. “The second quarter was clearly better than we expected,” he told analysts on a conference call. “Customers signaled increased confidence in their ordering patterns.” After months of global recession, Otellini noted that the company’s second-quarter results “reflect improving conditions” in the PC market.

“Intel is seeing a firming up in demand,” he added. “It’s encouraging news for the industry.”

Indeed. Intel is a bellwether for the tech sector; as goes Intel, so goes the industry. So, if Intel says demand is beginning to return to normal seasonal patterns, then the industry may truly be stabilizing. That said, there’s still quite a bit of economic volatility–enough to suggest that it might be wise not to read too much into Intel’s performance.

Said analysts at JP Morgan: “Although the Intel quarter was clearly spectacular on all fronts, we continue to believe the upside was driven by inventory replenishment as we have not seen any evidence of increasing PC demand.”

Shares of Intel (INTC) are trading up 6.77 percent at $17.97 this morning.

Analysts surveyed by Thomson Reuters expected Intel (INTC) to report revenue of $7.3 billion and a profit of eight cents per share. Instead the company reported revenue of $8 billion and non-GAAP profits of 18 cents (PDF). And it predicted third-quarter revenue above Wall Street’s expectations.

In a statement, CEO Paul Otellini said the results “reflect improving conditions in the PC market segment with our strongest first- to second-quarter growth since 1988 and a clear expectation for a seasonally stronger second half.”

Now admittedly, Intel did post earnings of 28 cents a share in the same period last year. So its fortunes clearly declined in the months that followed. That said, the company appears to be on the rebound after hitting the bottom Otellini declared back in April.

“Basically, very strong numbers for the quarter and guidance is in line with seasonal trends,” Collins Stewart analyst Ashok Kumar told Reuters.” It’s an extremely strong number given the macro economic backdrop. Despite those headwinds, the company delivered significant upside to both guidance as well as as expectations. The big unknown is whether it’s anything more than inventory replenishment.”

Intel shares are on the upswing on the news.

European regulators slapped Intel with an antitrust fine and, as expected, it’s a large one–a record $1.45 billion, which dwarfs even the $1.2 billion fine levied against Microsoft in 2008. The largest ever assessed for monopoly abuse, the fine follows charges that Intel (INTC) abused its market dominance by illegally inducing PC manufacturers to use its chips over those of rival AMD (AMD).

“The Commission finds that Intel did not compete fairly, frustrating innovation and reducing consumer welfare in the process,” Neelie Kroes, the European Commissioner for Competition Policy, said at a news conference announcing the fine. “Given that Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for over five years, the size of the fine should come as no surprise.”

And after all, it could have been worse. The $1.45 billion assessment is quite a bit less than the maximum fine the EC could have levied–10 percent of a company’s annual revenue. Given that Intel made $37.6 billion in 2008, the EC could have slapped it with a penalty of $4 billion.

Intel denied any wrongdoing and said it would appeal. “Intel takes strong exception to this decision,” CEO Paul Otellini said in a statement released immediately after the announcement. “We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace–characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal. We do not believe our practices violated European law. The natural result of a competitive market with only two major suppliers is that when one company wins sales, the other does not.”

A little better than expected.

Not the most exuberant of pronouncements, but when you’re coming off a first quarter in which profit fell 55 percent, it’s cause for a little optimism. Especially, since Otellini says demand is slowly slipping back into its seasonal patterns. “We will see seasonality in the second half,” he said. “I’m getting increasingly comfortable that the dip here is not as aggressive as they are showing.”

Sadly for Otellini, that’s not likely to be the case. Sources close to the company tell Bloomberg that IBM is knee-deep in talks to acquire Sun and that a deal may be announced as soon as next week.

While the mobile computing era was obviously born quite a while back, iSuppli’s report would seem to make its advent official. “This marks a major event in the PC market because it marks the start of the age of the notebook,” said Matthew Wilkins, principal analyst for compute platforms at iSuppli. “The notebook PC is no longer a tool only for the business market, or a computer for the well-off consumer; it’s now a computer for everyone. While the third quarter will be remembered as the time when the scale of the global economic/credit crunch truly became apparent, the PC market managed to deliver strong unit shipment growth during the period.”

Best of all, Intel predicted more strong sales in the months to come. “As we enter the second half, demand remains strong for our microprocessor and chipset products in all segments and all parts of the globe,” Intel CEO Paul Otellini said in a statement. Comments like that, coupled with Intel’s strong Q2 earnings, should go a long way toward reassuring investors that the technology sector isn’t succumbing to the economic downturn. At least until AMD reports second quarter results on Thursday. Analysts expect AMD (AMD) to post a loss of 52 cents per share.

In an interview with the Financial Times, Intel CEO Paul Otellini (pictured above) said he’s confident the company’s new Atom processor will expand Intel’s reach into the mobile phone market. “If you accept that the value proposition of the high end of the mobile-phone market is full Internet access that happens to have voice, my view is that it’s easier to add voice to a small computer than vice-versa,” Otellini told the FT, noting that the company’s expertise in PC chips will come in handy in making inroads into markets where devices are becoming increasingly more PC-like. Among them, those for televisions, ultra low-cost PCs, embedded controllers and, of course, smartphones. “We are bringing an element of computing into large markets, many of which are larger than the PC business, certainly in terms of units,” said Otellini. “Each of these four markets is a $10 billion opportunity by 2010 or 2011.”

Message to ARM: We’re coming for you.