Intel misses expectations with third-quarter profit

Strong demand for notebook computers powered by Intel Corp. chips helped boost third quarter profits by 5 percent, but the technology bellwether missed analyst expectations by a penny.

In the three months ended Oct. 1, the world's largest maker of PC microprocessors earned $2.0 billion (Ђ1.7 billion), or 32 cents per share, compared with $1.91 billion, or 30 cents a share, in the same period a year ago.

Revenue rose 18 percent to $9.96 billion (Ђ8.34 billion) compared with $8.47 billion in the year-ago period.

Intel said the latest results included an increase in taxes of about $250 million (Ђ209.4 million) and the payment of $300 million (Ђ251.3 million) to MicroUnity Inc. to settle a patent infringement case.

Analysts were expecting the chip maker to earn 33 cents per share on sales of $9.92 billion (Ђ8.31 billion), according to a survey by Thomson Financial. In September, the Santa Clara-based company had tightened its revenue forecasts to between $9.8 billion (Ђ8.2 billion) and $10 billion (Ђ8.4 billion).

Intel said it expects revenue in the fourth quarter to be between $10.2 billion (Ђ8.5 billion) and $10.8 billion (Ђ9.05 billion).

Shares of Intel slid more than 3 percent in after-hours trading, falling 73 cents to $22.99, after gaining 26 cents during the regular Nasdaq session in advance of the earnings report.

As in recent quarters, Intel reported strong demand for its Centrino chips for wireless-enabled laptop computers. The chips, like the computers, carry a price premium over those built for desktop machines.

But some analysts think weakening sales in desktop computers _ where Intel chips command about a 90 percent share of the market _ could eventually hurt the chip giant.

The company also has been under pressure in the corporate server market from Advanced Micro Devices Inc., which beat Intel to market by six months with its high performance "dual-core" chips.

"Intel's financial position and status as the semiconductor bellwether may be in jeopardy if it fails to find strategic opportunities in other faster growing markets such as communications and consumer electronics," Apjit Walia, a semiconductor analyst at RBC Capital Markets, wrote in a research note Tuesday.

For the first nine months of the year, Intel earned $6.21 billion (Ђ5.2 billion), or $1 per share, compared with $5.39 billion, or 82 cents per share in the same period in 2004. Nine-month sales grew to $28.63 billion (Ђ23.98 billion) from $24.61 billion last year, AP reported. V.A.