Intel profit beats expectations, future less clear

By Eric Auchard and David Lawsky

SAN FRANCISCO (Reuters) - Technology bellwether Intel Corp posted a 12-percent rise in quarterly profit as the world's biggest computer chipmaker said demand, while uncertain, was holding up despite the global economic crisis.

Intel said on Tuesday it expects revenue in the fourth quarter of $10.1 billion to $10.9 billion. The midpoint of that range, $10.5 billion, is around 2 percentage points lower than Wall Street had hoped but better than many had feared.

Meanwhile, profit in the quarter topped Wall Street targets and Intel shares rose 5 percent in after-market trade.

Investors said Intel is benefiting from one of its strongest product line-ups in years, is executing well and keeping a lid on costs. But the company's uncertainty over the financial crisis's influence on the computer sector limited the positive effect on other tech stocks.

"For me, this is a relief rally more than anything else," said Sean Conner, senior equity analyst, First American Funds in Minneapolis.

"If you have to be somewhere with a slower future, this may not be a bad place to be," said Mike Holland, fund manager at Holland & Co, which oversees assets in excess of $4 billion, including Intel, IBM and Apple.

Intel's shares rose 4.5 percent to $16.65 in extended trade as analysts and investors said the lowered outlook was better than many had hoped against the backdrop of a global financial crisis. The stock had closed down 6.2 percent ahead of the report in regular session trading on Nasdaq on fears it would do worse.

In other tech earnings news, Altera Corp, which makes programmable chips, said third-quarter profit climbed 37 percent, topping Wall Street targets and pushing its shares up 6 percent to $18.10 in late trade.

But Linear Technology Corp said its second-quarter revenue ending in December would fall 10 to 20 percent from the prior quarter due to a decline in orders and softness in the industry, sending its shares down 14 percent to $22.31.

FINANCIAL CRISIS IMPACT UNCLEAR

Santa Clara, California-based Intel said the average selling price for its microprocessors dipped as sales increased of its smaller, lower-priced Atom processor for use in new mobile computers that are smaller than conventional notebooks. It said it generated $200 million in revenue from Atom chip sales.

"As we look to Q4, it is hard to know what impact the financial crisis will have on end customer demand," Chief Executive Paul Otellini said in a statement. He added that he was confident in his company's ability to outpace competitors "at a time when business levels are difficult to predict."

Third-quarter net income rose to $2.01 billion, or 35 cents per share, from $1.86 billion, or 31 cents per share, in the year-ago quarter. Revenue rose 1 percent to $10.2 billion.

Wall Street had been looking for a third-quarter profit, on average, of 34 cents, according to Reuters Estimates.

"In light of what's going on in the economy, in the market, it's nice to see a company come through and actually beat numbers," said Jason Pride, director of research at Haverford Trust Co., which owns Intel shares.