SANTA CLARA (dpa-AFX) - Intel Corp. (INTC) said Tuesday after the markets closed that its third quarter profit fell 14% from last year, as revenue declined due to a sluggish PC market while operating expenses rose.
However, the company's quarterly earnings per share came in above analysts' expectations, as did its quarterly revenue. At the same time, the company gave a downbeat revenue forecast for the fourth quarter.
'Our third-quarter results reflected a continuing tough economic environment,' said Paul Otellini, Intel president and CEO. 'The world of computing is in the midst of a period of breakthrough innovation and creativity. As we look to the fourth quarter, we're pleased with the continued progress in Ultrabooks and phones and excited about the range of Intel-based tablets coming to market.'
Intel shares are currently losing 2.19% in after hours trading after closing the day's regular trading session at $22.35, up 62 cents or 2.85%. The shares trade in a 52-week range of $21.40 to $29.27.
The world's biggest chipmaker reported net income for the third quarter of $2.97 billion or $0.58 per share, compared to $3.47 billion or $0.65 per share for the year-ago quarter.
Excluding items, adjusted net income for the third quarter was $3.12 billion or $0.60 per share, compared to $3.63 billion or $0.68 per share in the prior year quarter.
On average, 44 analysts polled by Thomson Reuters expected the company to earn $0.50 per share for the third quarter.
Gross margin for the third quarter narrowed to 63.3% from 63.4% a year ago, while adjusted gross margin for the quarter remained flat with last year at 64.3%.
Operating expenses for the quarter surged 14% to $4.7 billion, with R&D expenses up 24%.
Santa Clara, California-based Intel said revenue for the third quarter fell 5.4% to $13.46 billion from $14.23 billion in the same quarter last year. Forty-three analysts analysts had a consensus revenue estimate of $13.23 billion for the third quarter.
Last month, Intel lowered its third quarter revenue outlook to $13.2 billion, plus or minus $300 million, from its earlier range of $14.3 billion, plus or minus $500 million, citing weaker than expected demand for chips as customers reduced inventory and sales of personal computers slowed amid a challenging macroeconomic environment.
The company had also lowered its gross margin outlook for the quarter to 62%, plus or minus one percentage point from its prior expectation of 63%, plus or minus a couple of percentage points.
PC client group revenue for the third quarter fell 8% year-over-year to $8.6 billion. This group caters to desktops, notebooks, and wireless connectivity products.
Intel is the world's largest supplier of microprocessors, the brains of personal computers, with roughly 80% of the global market share.
Earlier this month, two industry research firms International Data Corp. (IDC) and Gartner Inc. (IT) said that global PC shipments in the third quarter of 2012 fell over 8% from last year, as the popularity of latest smartphones and media tablets continued to hit PC demand and PC vendors liquidated inventory a ahead of the release of Microsoft Corp.'s (MSFT) Windows 8 operating system.
Data center group revenue for the quarter rose 6% from a year earlier to $2.7 billion. This group caters to the server and storage markets.
Other Intel Architecture Group revenue for the quarter fell 14% to $1.2 billion. This group caters to the smartphone, tablet, netbook and mobile communication markets.
Software and services group revenue surged 9% to $588 million in the third quarter.
About 57% of Intel's revenue in the second quarter came from the Asia-Pacific region. The company's Asia-Pacific revenue for the quarter fell 4% and Europe revenue declined 2%, while Americas revenue for the quarter dropped 6%. Japan revenue for the quarter slipped 16% from a year earlier.
During the third quarter, Intel repurchased $1.2 billion in stock, and closed its $3.2 billion strategic equity investment in ASML Holding, N.V.
Looking forward, the company said it expects fourth quarter revenue to be $13.6 billion, plus or minus $500 million. Analysts currently expect the company to post revenue of $13.78 billion for the fourth quarter.
Gross margin for the fourth quarter is expected to be 57%, plus or minus a couple percentage points, while adjusted gross margin for the quarter is expected to be 58% plus or minus a couple percentage points.
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