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The world's biggest chipmaker reported net income for the third quarter of $2.0 billion or $0.35 per share, compared to $1.8 billion or $0.30 per share for the year-ago quarter and $1.6 billion or $0.28 per share for the previous sequential quarter.
Results for the latest quarter include an after-tax impairment charge of $162 million associated with the Intel's investment in Numonyx, a flash-memory joint venture with STMicroelectronics NV. The prior year quarter results included $125 million in restructuring and asset impairment charges and the prior quarter results included restructuring charges of $96 million.
On average, 33 analysts polled by First Call / Thomson Financial expected the company to earn $0.34 per share for the third quarter.
Gross margin for the third quarter was 58.9%, compared to 51.2% in the prior year quarter and 55.4% in the prior quarter. The company attributed the sequential improvement in gross margin mainly to lower microprocessor unit costs and higher microprocessor revenue.
Operating income for the third quarter was $3.1 billion, compared to $2.1 billion in the third quarter of last year and $2.3 billion in the second quarter.
Santa Clara, California-based Intel said revenue for the third quarter increased 1% to $10.22 billion from $10.09 billion in the same quarter last year. Third quarter revenue grew 8% sequentially. Thirty-four analysts had a consensus revenue estimate of $10.26 billion for the third quarter.
For the third quarter, the company had expected revenue of $10.0 billion to $10.6 billion and gross margin of 58% plus or minus a couple of points.
"Intel delivered the best third-quarter revenue in its history," said Paul Otellini, Intel president and CEO. "We were solidly profitable, with operating income of over $3 billion, reflecting strong across-the-board execution and best-of-class products."
The company's Digital Enterprise Group reported revenue of $5.3 billion for the third quarter, down 3.4% from $5.5 billion last year. Microprocessor revenue declined to $4.06 billion from $4.12 billion a year ago, while chipset, motherboard and other revenue fell to $1.25 billion from $1.41 billion in the same quarter last year. The group's operating income, however, rose 28% to $1.77 billion from $1.38 billion last year.
Third quarter revenue from the company's Mobility Group increased 18% to $4.7 billion from $4.0 billion in the year-ago quarter. Microprocessor revenue grew to $3.4 billion from $2.8 billion a year ago, while chipset and other revenue increased to $1.3 billion million from $1.1 billion last year. The group's operating income surged 43% to $1.85 billion from $1.29 billion a year earlier.
Revenue from Intel Atom microprocessors and chipsets into the new netbook and nettop segments was about $200 million.
The company said the total microprocessor average selling price was lower sequentially. Excluding shipments of Intel Atom microprocessors, the average selling price was flat.
About 53% of the company's revenue came from the Asia-Pacific region. Asia-Pacific revenue for the quarter rose 3.5% to $5.4 billion from $5.2 billion a year ago, while Americas revenue fell 8.7% to $1.9 billion from $2.1 billion last year and Europe revenue increased 3.3% to $1.9 billion from $1.8 billion in the prior year quarter. Japan revenue for the quarter totaled $1.06 billion, up 7% from $994 million a year earlier.
During the third quarter, Intel repurchased 93 million shares of its common stock for $2.1 billion.
For the first nine months of the year, the company reported net income of $5.06 billion or $0.87 per share, compared to $4.71 billion or $0.79 per share for the same period last year.
Revenue for the nine-month period increased 6.3% to $29.36 billion from $27.62 billion in the prior year period.
Looking forward to the fourth quarter, the company expects revenue of $10.1 billion to $10.9 billion and gross margin of 59% plus or minus a couple of points. Analysts currently expect the company to post revenue of $10.77 billion for the fourth quarter.
Intel said current uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters and makes it more likely that the company's actual results could differ materially from expectations. As a result, the company plans to a mid-quarter business update on December 4.
Otellini said, "As we look to Q4, it is hard to know what impact the financial crisis will have on end customer demand. We are confident that our product portfolio, strong cash flow, commitment to deploying new technology and market momentum will allow us to outpace peer companies at a time when business levels are difficult to predict."
The company trimmed its 3008 capital spending plans modestly to $5 billion plus or minus $100 million from its prior expectation of $5.2 billion plus or minus $200 million. Intel's processors are the key component of more than 75% of the world's PCs, making its financial performance an indicator of global demand for technology.
Intel's main rival AMD is scheduled to report third quarter financial results on Thursday. Analysts currently expect the company to report a loss of $0.40 per share on revenue of $1.48 billion for the third quarter.
In terms of stock performance, Intel shares have lost 34.02% in the last one year during which AMD shares have lost 69.894%. Intel shares trade at 11.63 times estimated 2009 earnings.
Intel shares, which have traded in a range of $14.26 to $27.99 over the past year, closed Tuesday's regular trading session at $15.93, down $1.06 or 6.24% but gained 60 cents or 3.77% in after hours trading.
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