Intel’s 143% Increase in Profit Doesn’t Satisfy the Market : Technology: Fear that the company is losing its dominance pushes stock price down $4.75.

Intel Corp., the nation’s biggest computer chip maker, reported a 143% jump in third-quarter profit Monday, but the news wasn’t good enough for investors, who expected better.

Fearful that Intel’s dominance in the semiconductor industry may be coming to an end, they pushed the company’s shares down $4.75 to $65.50 on the Nasdaq market.

Santa Clara-based Intel said profit for the quarter ended Sept. 25 was $584 million, or $1.33 a share, compared to $241 million, or 56 cents, a year ago. Sales totaled $2.24 billion, up 57% from $1.43 billion in the year-earlier period.

Although the consensus among most analysts had been for per-share earnings of about $1.33, some had privately expected earnings as high as $1.55, said Dan Kleskin, analyst with Robertson Stephens Co. in San Francisco.

Kleskin called those higher expectations unrealistic, and said Intel’s margins are already beginning to sag and its overall growth is expected to slow in the future.

Intel’s sales have been pushed by a surge in personal computer purchases, a result of a price war that has dramatically lowered prices for PCs. An estimated 80% of PCs now use Intel microprocessors, the brains of these computers.

“Our customers in the personal computer industry are offering users some very powerful systems at very attractive prices. As a result, personal computer demand has grown and our unit volumes have notched up steadily,” said Andrew S. Grove, president and chief executive of Intel.

He said the company is especially pleased with sales of its newest flagship Pentium processor, which the company began delivering in March. “We are on track to ship hundreds of thousands in 1993 and millions next year,” Grove said.

Intel also said its sales of flash memory chips and other semiconductor products were strong for the quarter.

Sales and profit for the first nine months of fiscal 1993 surpassed figures for all of last year, the company said.

Intel’s profit the first three quarters was $1.7 billion, or $3.86 per share, more than 1 1/2 times the $638 million, or $1.49, earned in the same period in 1992. Revenue totaled $6.4 billion, up 60% over the same period last year.

But analysts noted that Intel faces increasing pressure from competitors. Last week, Texas Instruments announced it would begin competing with Intel in the production of 486 microprocessors, a popular category of PC chip and one notch below the Pentium in processing power. And Advanced Micro Devices Inc., Intel’s principal competitor, is working hard to develop a Pentium-level processor.

In addition, early next year, computers using the PowerPC processor, developed by International Business Machines Inc., Apple Computer Inc. and Motorola Inc., will begin appearing on store shelves. The PowerPC is widely considered as powerful as the Pentium.

“They are going to have other competitors nipping at their heels. That is bound to eventually impact overall profitability. The market tends to be cautious on this,” said Tim Bajarin of Creative Strategies, a Santa Clara-based market watcher.

“They really are a juggernaut,” said semiconductor analyst Dan Hutcheson, president of VLSI Research in San Jose.

“It’s like the Japanese in the ‘80s. Intel’s its own Japan: They don’t make mistakes, they don’t stop,” Hutcheson said. “They just go.

“The only issue is, when’s it going to end?” he said.