CNBC.com Intel Earnings

Intel's quarterly report today might be one of those rare cases of "not bad" being "good enough," based on trading reaction to these numbers.

And I've just learned that despite suggestions to the contrary, Intel

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[INTC  Loading...      ()   ] will in fact meet full year gross margins guidance of 57 percent, and that's key for investors. More on that in a second.

Intel beat earnings per share expectations by a penny, reporting 35 cents versus the 34 cents that Wall Street expected. That news came on essentially in line revenue of $10.2 billion versus the $10.26 billion consensus. Gross margins on the quarter were a pleasant surprise, beating the Street's 58 percent slightly, coming in at 58.9 percent.

The trouble for Intel, if there is some, comes in the company's fourth quarter expectations. Intel is now offering a revenue range of between $10.1 billion and $10.9 billion, or only 3 percent sequential revenue growth based on that mid-point of $10.5 billion. That's essentially what the Street was pricing into Intel shares as they began to fade in value into today's report. That makes sense considering this is a company that normally sees 7 percent sequential growth. Expectations began to ratchet down in recent weeks to only 5 percent, and then down to 3 percent today, which is exactly where Intel came in.

Still, some are calling into question Intel's EPS number since the company was taxed at a far better-than-expected 28 percent rate, instead of the normal 33 percent. If the usual tax rate was used, Intel's EPS would be driven down 30 cents a share. Something else to consider.

More issues for Intel: Gross margin expectations in the fourth quarter are also lighter than expected. In order for Intel to meet its full-year margin expectation, the company had to project 60 percent in fourth quarter gross margins. Instead, Intel only came in at 59 percent, thanks in part to that lighter than expected revenue.

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Intel has always maintained that it had not seen the slowdown that gripped so many other companies, and that so many investors were concerned about. It would appear that the company might be feeling some of that pressure. That is until I just spoke to the company and Intel reassures me that despite the lower-than-expected revenue range, and the 59 percent fourth quarter gross margin, the company will meet that 57 percent full year gross margin number, and that's good for investors.

In the release, CEO Paul Otellini says, "As we look to Q4, it is hard to know what impact the financial crisis will have on end customer demand. We are confident that our product portfolio, strong cash flow, commitment to deploying new technology and market momentum will allow us to outpace peer companies at a time when business levels are difficult to predict."

In other words, everyone might be doing a whole lot worse, but we won't be as bad as them. Again, we're "not bad", which might be "good enough."

Jefferies chip analyst John Lau told me moments after the Intel numbers were released that, "We believe Intel continues to be one of the safest large cap companies in our universe. While the PC growth rate is now as solid as we would like, it reflects the macro economy. And Intel remains one of the most solid companies."

Meantime, check back sometime later when we'll post my complete interview with Intel Chief Financial Officer Stacey Smith.

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