Intel: Profits only marginally up

Intel: Profits only marginally up

The world's largest maker of PC microprocessors Intel Corp., could not live up to the market expectations. Its third quarterly profits rose by a mere 5 percent. The 5 percent profit was triggered by a demand for notebook computers.

At the end of third quarter Intel earned a profit of $2 billion as against $1.91 billion for the same period a year ago. The total revenue rose by around 18 percent. The market analysts had greater expectations from the microprocessor major. The earnings per share were roughly around 32 cents as against a market expectation of 33 cents. Intel expects its fourth quarter profits to be much better.

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According to sources in Intel, an increase in taxes and a payment to settle a patent infringement case ate in to the company's profits. The increases in taxes were to the tune of $250 million and it had to pay $300 million to Micro Unity Inc. to settle the patent infringement case. During the regular share trading hours, the Intel scrip gained 26 cents to reach $23.72. Once the third quarter results were announced the Intel scrip slid by 77 cents.

Experts believe that the results would have been much better had the production of chipsets gone up. There was a very heavy demand. The company shipped out a record number of chipsets although the supply was not up to the mark. This problem may also continue in the fourth quarter until the company raises its production capacity considerably.

The Centrino chips of Intel are in strong demand as they are required for wireless enabled laptop computers. This has been proved true in the recent quarters. The sale of notebook chips rose in the third quarter and it constituted for the bulk of third quarter profits. Sales to countries like India and China was roughly up to 28 percent of the total profits. The entire Asian region accounted for 52 percent of the company's revenue as against 20 percent for Europe and 19 percent for America. Intel is extremely optimistic about the future.