Intel: Quarterly Profit Up But Uncertainty Ahead

Intel INTC earnings

Technology bellwether Intel posted a 12 percent rise in third-quarter profit and said current quarter revenue could come in lighter than expected amid uncertain demand, but the outlook was better than feared, sending its shares higher.

Intel (NASDAQ: INTC), the world’s biggest computer chipmaker, said on Tuesday it expects revenue in the fourth quarter of $10.1 billion to $10.9 billion. Analysts were looking for revenue between $10.4 billion and $11.18 billion, according to Reuters Estimates.

“For me, this is a relief rally more than anything else,” said Sean Conner, senior equity analyst, First American Funds in Minneapolis.

“The bottom line is that they did better than expected. Gross margins came in better than people were expecting, for both this quarter and in its outlook for the fourth quarter.”

Intel’s shares rose 4.8 percent to $16.71 in extended trade as analysts and investors said the lowered outlook was better than many had hoped against the backdrop of a global financial crisis.

“As we look to Q4, it is hard to know what impact the financial crisis will have on end customer demand,” CEO Paul Otellini said in a statement. He added that he was confident in his company’s ability to outpace competitors “at a time when business levels are difficult to predict.”

Third-quarter net income rose to $2.01 billion, or 35 cents per share, from $1.86 billion, or 31 cents per share, in the year-ago quarter. Revenue rose 1 percent to $10.2 billion.

Wall Street had been looking for a third-quarter profit, on average, of 34 cents per share, according to Reuters Estimates.

The company, which is the industry’s biggest investor in the next generation of chip production equipment, trimmed its capital spending plans modestly for 2008 to $5 billion, plus or minus $100 million, from $5.2 billion previously.

Analysts had expected revenue, on average, to rise 1.6 percent to $10.25 bln, according to Reuters Estimates. The range of forecasts had varied from flat growth to 4 percent.

Gross margin jumped to 58.9 percent from 55.4 in the second quarter ended in June. Intel said its ability to cut microprocessor production costs as microprocessor revenue rose helped margins, even as demand shifted toward lower margin chips used in a new class of small computers called netbooks.

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