Intel posts strong Q3 earnings

With strong sales across all major product lines, Intel reported revenue just shy of $10 billion for its third quarter of 2005, beating analyst expectations.

With strong sales across its major product lines, Intel has reported $US9.96 billion in third-quarter revenue, a jump of 18 per cent over the $US8.47 billion the chip maker posted for last year's third quarter.

Unit sales of microprocessors, chipsets, flash memory and wireless and portable device components all hit record levels for the quarter, Intel said in a statement. Sales of motherboards, however, declined, the company said.

Revenue grew fastest in the Asia-Pacific region, where China is on the verge of overtaking Japan as the world's number two purchaser of PCs, Intel executives said.

Asia-Pacific revenue grew 28 per cent year-over-year, according to Intel CEO, Andy Bryant. "Growth in this region was fueled by continuing broad strength in demand for mobile platforms, including strong local consumption in China and India," he said.

The company's revenue grew by a more modest 6 per cent, year over year, in Europe and the Americas, Bryant said.

Earnings were hit by a $US300 million patent infringement settlement between the chip maker and broadband software vendor, MicroUnity, reached earlier this month, as well as a $US250 million tax bill that resulted from Intel's decision to repatriate foreign-earned income, the company said.

The results were at the high end of what Intel itself had been expecting for the quarter, which ended October 1. Last month, Intel had said that it expected revenue for the third quarter, typically one of the strongest quarters of the year, to fall between $US9.8 billion and $US10 billion.

Revenue for Intel's fourth quarter was expected to be between $US10.2 billion and $US10.8 billion, the company said.

This estimate was lower than the $US10.4 billion to $US11.1 billion range that financial analysts had been expecting. It was weaker, in part, because computer makers bought about $US100 million in excess inventory during the third quarter as a hedge against any supply shortages that might materialize, Bryant said.

"Growth in the third quarter was a little better than usual for this time of year, but growth in the fourth quarter is expected to be a little slower," he said.

Intel has had some difficulty meeting chipset demand as it has switched manufacturing processes and begun making chips on larger 300mm wafers. Intel had to temporarily pull back its production of low-end chipsets during the quarter in order to focus on the more lucrative high-end components, the company said.

As a result, it appears that some computer manufacturers did their fourth quarter ordering a little early.

"We had been in a period of tightness. Our customers wanted to make sure they had an ability to respond to a fourth-quarter upside," Bryant said. "It's perfectly natural to get a few extra parts."

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