Intel Beats Expectations for Third Quarter

Analysts Predict Slump in Tech Sector

Intel said its third-quarter profit rose 12 percent and squeaked past Wall Street's forecasts, but the chipmaker says its performance during the final months of the year is uncertain because of the financial crisis.

Yesterday, the company became the first of the large tech firms to release third-quarter financial results. Few investors are expecting other firms to match Intel, and many are anticipating bleak outcomes for the quarter. Some are even bracing for grim outlooks in the sector for the fourth quarter and well into next year.

Third-quarter results may not be far off Wall Street targets, some analysts say, because product sales were on the books before the financial crisis erupted. But plummeting consumer spending is negatively affecting nearly ever sector. Many electronics makers depend on holiday sales to round out their annual results but will probably not be able to count on that boost this year.

Intel shares fell 6.2 percent to close at $15.93 yesterday. After the close of market, Intel announced its profit for the third quarter was $2.01 billion, or 35 cents per share, compared with $1.79 billion, or 30 cents per share, in the corresponding period a year earlier. Analysts surveyed by Thomson Reuters expected 34 cents per share in profit.

Holding about 80 percent of the worldwide market for microprocessors, Intel's fortunes are closely tied to the overall health of the computer industry, which is under pressure due to decreased technology spending by consumers and businesses.

Companies such as Apple, AMD, Dell and HP will probably find themselves under similar pressure as consumers look for the best deals and forego expensive purchases.

"It looks like it's going to be a pretty bad fourth quarter, and it's only just begun," said Roger Kay, president of Endpoint Technologies. "During the last holiday season, everyone was buying on credit and pumping up the volume. This year, that's not going to happen."

Apple's premium-priced music players and computers, including the high-end MacBook Pro unveiled yesterday, cater to consumers with considerable disposable income.

But "the pool of discriminating buyers is getting smaller," he said. "By not offering any concession on the price front, they're going to end up in trouble."

Broader economic pessimism is also dealing blows to the stocks of Internet companies, sending Yahoo shares down 6.2 percent, to close at $12.65 yesterday. EBay shares lost 2 percent, to close at $17.74, and Amazon fell 9.9 percent, to $55.86.

Google's stock recently fell to its lowest point in over two years and closed yesterday at $362.71, a 4.8 percent drop.

One major reason is that online advertising overall is growing at a slower clip, according to the Interactive Advertising Bureau. Second-quarter online advertising revenue grew 12 percent, a drop from 25 percent growth in the same period a year ago.