Mobile Helps Fuel Intel Earnings

Net income was $2 billion, or 32 cents per share, compared with $1.91 billion, or 30 cents per share, for the same quarter in the prior year. Revenue was $9.96 billion, up 18 percent year-over-year, and 8 percent sequentially.

Analysts expected Intel to earn 33 cents per share, according to Thomson/First Call.

Intel said earnings per share were reduced by about 2 cents per sahre due to a settlement agreement with MicroUnity this month. Intel agreed to pay $300 million to MicroUnity, a privately held company focused on software defined broadband solutions, to resolve a patent infringement case.

In its September quarterly update, Intel told analysts that third quarter results would include the impact of an increase in taxes of some $250 million, or the equivalent of 4 cents per share.

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Speaking on a conference call with analysts, Intel president and CEO Paul Otellini said demand for mobile processors was strong. Despite AMD's growing server market share, Otellini noted that server processors did better than expected this year. Intel, which launched its first dual-core Xeon processors this month, is on track to deliver the next-generation dual-core platform in the first quarter, he said.

Though chip sales were within expectations, Intel executives said some large OEMs have built up about $100 million in chip inventory. They said the inventory should be sold off in the fourth quarter. Executives also said chipset supplies remain tight. But Otellini said that Intel, despite some rumors, will not exit the low-end PC chipset market. Intel will continue to produce those chipsets when it regains capacity, he said.

Intel said revenue from the channel was flat. Otellini said the channel represents about 30 percent of the chip maker's total business.

Intel said it expects fourth quarter revenue of $10.2 billion to $10.8 billion.