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Earnings Roundup

Intel reports profit, issues a warning

October 15, 2008|From the Associated Press

Intel Corp.'s third-quarter profit rose 12%, edging past Wall Street's estimates, but the chip maker cautioned that the pall the financial crisis had cast over the technology sector had made it hard to predict its results for the current period.

The company reported after the market closed Tuesday that its profit for the three months ended Sept. 27 was $2.01 billion, or 35 cents a share. That compares with $1.79 billion, or 30 cents, a year earlier.

Analysts surveyed by Thomson Reuters expected profit of 34 cents a share.

Sales were $10.22 billion, up just 1% over a year earlier, but Intel said the figure was a record for the third quarter. Analysts expected $10.26 billion.

The Santa Clara, Calif.-based company, the world's No. 1 maker of microprocessors for personal computers, said that it still expected healthy and relatively unchanged profit margins for the October-December quarter. Sales for that period could fall below the range of estimates offered by Wall Street analysts, however.

Stacy Smith, Intel's chief financial officer, said that because of the economic turbulence, Intel planned to update investors in early December, ahead of the formal fourth-quarter report, about the company's finances.

"We have a high degree of uncertainty around demand in the fourth quarter, but our execution is good," he said.

Because Intel's processors are used in about 80% of the world's PCs and servers built with PC chips, its financial results are seen as a valuable gauge of the health of the broader technology sector.

A big reason Intel is able to wring out more profit despite only incrementally higher sales is because it's getting cheaper for the company to make each of its chips. Technological advances enable the company to squeeze more transistors onto the same slice of silicon while lowering the expense of making those chips.

Intel shares, which fell $1.06, or 6.2%, to $15.93 in the regular session, rose more than 3% in after-hours trading.

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