Intel Reports Big Revenue, Profit Gains in Third Quarter : Earnings: But some fear stock could take a tumble based on firm’s admission that sustaining current margins may be difficult.

Riding a continued boom in sales of its flagship Pentium microprocessor, computer chip giant Intel Corp. on Monday reported a 41% gain in profit and a 46% increase in revenue for the third quarter ended Sept. 30.

Santa Clara, Calif.-based Intel earned $931 million, or $1.05 per share, on revenue of $4.17 billion, compared to profit of $659 million, or 76 cents per share, on revenue of $2.86 billion for the comparable quarter a year ago. Although sales were at the lower end of Wall Street analysts’ forecasts, the earnings exceeded expectations.

Intel’s results--as well as those of IBM Corp. and Microsoft Corp., which report their earnings today--have been eagerly awaited by investors who are trying to determine whether high-flying technology stocks are due for a fall. Many technology companies have already seen their shares fall significantly since the summer, and some fear further declines if there are any signs that demand for computers, cellular phones and other technology products is slackening.

The Intel numbers were considered very strong in most respects: The earnings announcement came after the market had closed, and Intel’s shares rose $1.375 to $64.50 in after-hours trading. The stock was up 37.5 cents to $63.125 in regular Nasdaq trading Monday.

Still, some analysts said Intel’s stock could take a hit today based on the company’s admission that it may be difficult to sustain its current margins. That’s because a growing portion of Intel’s business comes from producing motherboards and other personal computer component products that carry lower profit margins than its microprocessors.

The core microprocessor business, however, shows no signs of slowing as consumers buy PCs in record numbers.

For the first time, Intel said, shipments of the Pentium chips outstripped those of its predecessor, the 486. While the 486 now faces some competition from clone chips--and thus pricing pressures--the Pentium retains a virtual monopoly on high-end, IBM-compatible PC microprocessors.

The somewhat lower-than-expected revenue for the quarter was attributed to an October price cut on microprocessors, which may have caused some customers to delay purchases.

Dan Niles, a semiconductor analyst for San Francisco investment bank Robertson, Stephens & Co., said Intel should enjoy a strong December quarter as more Americans buy computers for home use. Last year, a record-breaking number of families bought their first PCs. Most of them were powered by Intel microprocessors--as are about 75% of all PCs worldwide.

But Niles was concerned about the growing importance of motherboards in Intel’s product mix. Motherboards are a combination of its microprocessor and other chips that control monitors and disk drives and perform other tasks. While most PC makers design their own motherboards, a growing number are buying them from Intel to cut down on the time it takes to bring a new machine to market.

The motherboards carry a higher price tag than microprocessors, but they also carry lower profit margins.

Intel’s gross margins--sales price minus the cost of raw materials--were slightly more than 51% for the quarter.

“Intel said if demand for motherboards grows, profit margins will erode,” Niles said. “For the first time, we’re hearing Intel talk about gross margins in the higher 40s.

“For a lot of people, that will be a big negative. And a result, there’s a good chance Intel will get dinged [today],” he added.