Intel barely beats for Q3

Intel reported net income of $2 billion, or 35 cents per share, for the third quarter, up from $1.8 billion and 30 cents a year ago. Revenue was $10.2 billion for its third quarter, up 1 percent over the same quarter a year ago. (statement) Analysts had expected the company to report earnings of 34 cents a share on revenue of $10.25 billion.

Paul Otellini, Intel president and CEO, said in a statement:

"As we look to Q4, it is hard to know what impact the financial crisis will have on end customer demand. We are confident that our product portfolio, strong cash flow, commitment to deploying new technology and market momentum will allow us to outpace peer companies at a time when business levels are difficult to predict."

updated:  In a call with analysts today, Otellini said there were mixed signs for the outlook into the fourth quarter, largely because of the uncertainty surrounding the current market conditions. Corporate sectors are expected to be soft as IT feels the impact of the economic conditions. Consumer side traffic is also expected to be light, but he noted that interest in notebooks and netbooks is strong. Likewise, the company acknowledged the changing economic conditions and the uncertainty of the impact on Intel. It said it would host a formal mid-quarter update on Dec. 4 to provide an update on financial conditions and business trends of the quarter. At this point in the economic crisis, it's hard to predict - at this point - what impact the crisis will have, executives said.

The company forecast fourth-quarter gross margin at about 59 percent, mostly flat compared to the third quarter. Revenue was also adjusted lower than previously expected, to a broader range of $10.1 billion to $10.9 billion.

In a note to investors last week, Wachovia Capital Markets highlighted several factors that could continue to support Intel’s business – even as the global economic environment changes. From the report:

Strong notebook growth: We believe that the strong secular trend for notebooks will allow this segment of the PC market to react with greater resiliency to the current economic environment. Even if there is fairly significant deceleration in growth, we think that the notebook market might still hold in at 25-30% growth, excluding low-cost notebooks, in the second half of this year.

Atom: Over the last couple of months, several notebook manufacturers have introduced new low-cost notebooks which feature the Atom processor. We think Intel probably shipped several million Atom chips in the September quarter, representing roughly $100 million or more of incremental revenue.

Stable pricing: In the past year, AMD has made a number of significant price cuts, particularly in the desktop space, while Intel has not responded with any major price cuts of its own.  We believe that Intel’s pricing stability, relative to AMD’s, has been sufficiently justified by a steady rollout of new and improved microprocessor products.

Shares of Intel were down more than 6 percent in regular trading, closing at $15.93. Shares were on the upswing in after-hours trading, up more than four percent to $16.59.