Intel's 3Q Profit More Than DoublesIntel's 3Q Profit More Than Doubles

Intel on Tuesday reported a profit of $1.66 billion, or 25 cents a share, on revenue of $7.83 billion for the third quarter, ended Sept. 27. That's a healthy 142% increase in net income from the same period a year ago, when Intel reported a $686 million profit on revenue of $6.5 billion.

The company said the increase was driven largely by record sales of microprocessors, chipsets, and motherboards, as the company benefited from the strongest demand for PCs since the 1990s tech boom.

It's the best sequential growth for a third quarter Intel has seen in 25 years, said Andy Bryant, Intel's chief financial and enterprise services officer, during the company's earnings call. In addition to its success selling server and PC chips, chipsets, and motherboards, the company's flash-memory and Ethernet-connectivity product sales surpassed second-quarter numbers.

One of the company's few weak points was continued loss related to its wireless communications and computing business, which posted an operating loss of $124 million on revenue of $450 million. For the third quarter a year ago, the loss was $30 million on revenue of $586 million. Intel hasn't turned the corner in terms of share in the cell-phone market and actually lost share during the quarter, said Paul Otellini, president and chief operating officer. Otellini added that Intel has been struggling in this area for the past nine months.

The third quarter saw the launch of Intel's latest 64-bit Itanium 2 processors, designed for dual-processor servers. The company also increased the speed of its Xeon processor for two-way systems to 3.2 GHz.

On the PC side, Intel rolled out a new chipset for its notebooks running Centrino mobile technology during the third quarter. The new chipset is designed to provide these notebooks with power-saving features, more memory, and integrated graphics performance when used with DDR-333 memory. Intel also delivered a new Pentium 4 for mobile PCs that uses the company's hyper-threading technology and runs as speeds of up to 3.2 GHz. In addition, the company introduced its Pentium 4 Extreme Edition processor, designed to provide PC gamers with the benefits of hyperthreading technology, 3.2-GHz processing speeds, and an additional 2 Mbytes of cache memory.

At its September developer's forum, Intel introduced an expanded suite of platforms, tools, and software for its Internet Exchange Architecture Network Processors. These products are expected to play an important role in showing Intel's commitment to the AdvancedTCA, a group of 100 companies whose goal is to create a standardized platform architecture for carrier-grade telecommunications applications.

Intel came in on the high end of its revenue projections for the third quarter and predicted fourth-quarter revenue of $8.1 billion to $8.7 billion. The company expects to spend $4.3 billion on research and development for 2003, with capital spending falling between $3.6 billion and $3.7 billion.

The company's share price hit a 52-week high Tuesday, before its results were announced, closing at $31.08, up 28 cents. The price continued to rise in after-hours trading.