Intel's Q3 profit plunges 77 percent

Intel on Tuesday said its third-quarter net income plunged 77 percent before acquisition-related costs, but said it is confident it will see high growth when the economy recovers.

Net income for the quarter ended Sept. 29 was US$655 million, down from $2.9 billion a year ago, the chip maker said in a statement. Earnings were $0.10 per share, down from $0.43 per share in the third quarter of 2000, and in line with the consensus estimate of analysts polled by Thomson Financial/First Call.

Revenue for the quarter was $6.5 billion, down 25 percent from the year earlier, Intel said.

Including acquisition related costs, third-quarter net income was $106.0 million, a 96 percent drop from the previous year. Earnings per share including the additional costs were down 94 percent, to $0.02 per share, the company said.

Intel's President and Chief Executive Officer Craig Barrett called the results "solid" in a turbulent environment, and said that both revenue and microprocessor units were up from the previous quarter.

Economic conditions remain weak worldwide, however, and the company expects to see only "moderate" growth in both its processor and flash memory business in the fourth quarter, Barrett said in the statement.

Intel now expects fourth quarter revenue to be between $6.2 and $6.8 billion, Andy Bryant, Intel's chief financial officer, said in a conference call with analysts and reporters. Analysts had been expecting sales of $6.8 billion for the fourth quarter, according to a First Call estimate.

Third-quarter unit shipments grew sequentially in most major product categories, including processors, chip sets, motherboards and networking components, Bryant said.

Geographically, Intel saw revenue rise sequentially in every market except Japan, said Paul Otellini, general manager of the Intel Architecture Group. "Most mature markets in Asia continued to be soft, while emerging markets continued to grow," he said.

He acknowledged that the U.S. back-to-school market was "not particularly strong," but said Intel's business did strengthen overall in September.

The company's server business recovered somewhat during the quarter, when sales of its Xeon processor grew again after being down for two quarters, Otellini said. Pentium 4 shipments quadrupled, surpassing sales of Intel's Pentium III processor two weeks ago, he said. Shipments of flash memory products, widely used in cell phones and other gadgets, also increased, he said.

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