Intel Corporation (NASDAQ: INTC)  posted third quarter earnings of $0.35 per share on $10.22 billion in revenue.  Analysts expected the company to earn $0.34 EPS with $10.26 in revenue. Gross margins were 58.9%, up from Q2 and up from projections as its tax rate was 28.9% rather than the 33% projected. It also spent $2.1 billion to buy back 93 million shares.

As we expected, it is talking down expectations somewhat despite thislast quarter being its third best quarter ever:  

• "As we look to Q4, itis hard to know what impact the financial crisis will have on endcustomer demand. We are confident that our product portfolio, strongcash flow, commitment to deploying new technology and market momentumwill allow us to outpace peer companies at a time when business levelsare difficult to predict."

Intel expects revenue for the current quarter of $10.1 billion to $10.9 billion, whichis lighter than the mid-point and more in-line with what we thoughtthey would report if you look at our preview.  Many on Wall Street willbe upset though because the lower-end is even lower than what weexpected.  The company put gross margins guidance of 59% plus or minus a couple points and sees a lower tax ratethan before at 29%.

Intel was pounded down over 6% at $15.93 in regular trading and shareshave lost more than one-third of their value since the August highs.Its stock is currently up almost 4% at $16.55 in after-hours trading asmuch of this bad news was factored in and wasn’t as bad as somesensible traders might have been expecting.

Jon C. Ogg
October 14, 2008

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