Intel Profit Expected to Rise Modestly

Intel Corp.’s earnings growth is expected to slow in the third quarter as sales of popular low-cost personal computers are eroding the chip maker’s profitability, industry analysts said. Intel, the world’s biggest computer chip maker, is caught between two conflicting forces. On one hand, the company is increasing production of the Pentium II, a super-fast and highly profitable chip designed for powerful computers. On the other hand, consumers are buying loads of PCs for less than $1,000, putting pressure on PC makers to buy less expensive chips and other components from suppliers such as Intel, which is due to report earnings today. While about 20% of the chips that Intel sold in the third quarter were Pentium IIs--which sell for about $850--the average price for all Intel microprocessors will fall to about $215 in the quarter from $255 in the second quarter, analysts said. When Intel reports its earnings, Wall Street expects earnings per share of 91 cents on average. Santa Clara-based Intel shares fell 44 cents to close at $92.56 on Nasdaq.