Intel 3rd-Quarter Profit Beats Analyst Forecast

Intel Corp.’s third-quarter earnings beat forecasts on strong sales of its computer chips, but analysts said they were concerned that sales in coming quarters wouldn’t be as strong as they’d hoped.

The world’s largest computer chip company said Tuesday that net income was $1.6 billion in the quarter, essentially flat with the 1997 period, while earnings per share rose to 89 cents from 88 cents. Wall Street had expected Intel to report profit of 80 cents a share, according to First Call.

“We are pleased with our overall performance in the last quarter,” Intel Chief Executive Craig Barrett said in a prepared statement. “We had growth across nearly all of our geographies and product lines, including strong microprocessor sales. In the third quarter, the PC industry recovered from its inventory problems and is benefiting from strong seasonal demand.”

Intel said sales in the fourth quarter, normally its strongest because of holiday sales of personal computers, will be “up slightly” from the third quarter, disappointing many who expected a more optimistic forecast from the company. Intel’s sales could stagnate next year if a slowing economy prompts corporations to curb spending on computers and software.

“Last quarter was good, but next quarter is raising more questions,” said Steve Dube, an analyst at Wasserstein Perella Securities.

Sales at the world’s largest semiconductor maker rose 9.4% to $6.73 billion from $6.16 billion.

Intel shares fell $1.88 to close at $83.56 on Nasdaq. They fell as low as $81.50 in trading after the close of U.S. markets, when the Santa Clara-based company released earnings.

Though net income dipped slightly, earnings-per-share rose because the company had fewer shares outstanding than it did a year ago. Intel bought back 20.1 million shares in the third quarter for $1.7 billion.

In the last week, some analysts had been predicting an even greater upside surprise. Last week, Ashok Kumar, a Piper Jaffray analyst, raised his third- and fourth-quarter earnings estimates on Intel, saying he expected revenue growth would be stronger than Intel’s previous guidance for the third quarter as its lower-cost Celeron chips would be offset by the costlier Xeon processors for servers and workstations.

Intel said its gross margin percentage is expected to be flat or slightly up in the fourth quarter from 53% in the third quarter.

At a Glance

* Providian Financial Corp.’s third-quarter profit rose a greater-than-expected 70%, as the largest credit card lender to people with poor credit ratings added more customers. Net income rose to $82.6 million, or 85 cents a diluted share, from $48.6 million, or 50 cents, a year ago. Per-share results bettered the average estimate of 81 cents expected. Revenue at San Francisco-based Providian rose 59% to $625 million, as fee income more than doubled.

* Los Angeles-based Jefferies Group said third-quarter net income rose to $15.7 million, or 66 cents per diluted share, on revenue of $184.3 million, compared with $14.4 million, or 63 cents, on revenue of $184.8 million, a year ago.

* @Home Network, which provides high-speed Internet access to homes, reported a third-quarter loss, as well as sharp growth in its sales and its customer base. The Redwood City-based company said it lost about $9.7 million, or 8 cents a share, compared with a loss of $11.1 million, or 10 cents, in the year-ago period. Sales rose about 50% to $13.8 million from $9.2 million.

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