The record-setting $1.45 billion antitrust fine that the European Commission slapped Intel with in May for AMD abuse soured the company's Q2 results causing it to post an extraordinary loss of $398 million, or seven cents a share.

Otherwise, under the present economic circumstances, Intel did pretty darn good.

Revenues totaled $8 billion, up 12% sequentially and better than analysts expected. If the regulators hadn't stuck their hand in its pocket it would have earned a billion dollars, 18 cents a share, more than double what the pundits thought.

In a canned statement, CEO Paul Otellini, who alone called a bottom in April, was quoted as saying, "Intel's second-quarter 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."

Ahead of the conference call, the company said its closely watched gross margin was 50.8%, up 5.5 points sequentially and higher than it had anticipated.

Microprocessor shipments were up sequentially although ASPs were depressed except on its Atom chip.

Revenue from Atom and its chipsets came to $362 million, up 65% compared to Q1, a factor that's both good and bad. Cheap netbooks, one of the few bight spot in the dour environment, are believed to be cannibalizing pricier laptops.

Intel's inventories were cut by $240 million.

The company anticipates reporting revenues of $8.5 billion this quarter plus or minus $400 million and realizing a gross margin of 53%, which could swing two points either way.

Compared to last year Q2 revenues were off $1.4 billion but up $879 million from Q1. Intel's Q2 operating income of $1.4 billion was $820 million less than last year but $788 million better than Q1. Last year Intel earned 28 cents a share in the second quarter.

Intel is appealing the fine but probably stands a snowball's chance in hell of getting it overturned. AMD, the reason for the fine, will report next week.

Intel is the first major tech company out with earnings and its numbers set a positive tone. Its stock was up almost 7% in after-hours trading.