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Legal charge mars Intel's sparkling Q3

Sales and settlements up

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Intel cited broad success across all of its major product lines during a healthy third quarter FY2005. Despite record revenue, however, Intel missed earnings expectations by a penny due to a large legal charge.

The chipmaker reported an 18 per cent year-over revenue rise to $9.96bn. Net income also rose 5 per cent to $2bn with earnings per share (EPS) coming in at 32 cents. That EPS total fell below the 33 cent per share figure analysts had been expecting.

Intel took a 2 cents-per-share charge as a result of a settlement with MicroUnity. Intel will resolve the patent infringement dispute by paying MicroUnity $300m.

"In the third quarter, we achieved all-time records in company revenue and unit shipments across all of our major product lines," said Paul Otellini, Intel president and CEO. "Execution remained solid as we launched our new dual-core server platform ahead of schedule and began shipping microprocessors built on our industry-leading 65nm process technology."

But execution really wasn't all that solid as the dual-core chip Otellini mentioned arrived six months after AMD shipped a competing part. In fact, Intel won't have an honest to goodness competitor to AMD's Opteron chip until next year. AMD's server chip technology lead over Intel has helped it woo most of the major hardware makers, including a new deal with Fujitsu.

Despite the competitive pressure, Intel pointed to a number of major gains during the third quarter. Chip sales set a record as did chipset shipments. Flash memory shipments also hit a record and so did shipments of processors designed for mobile devices such as cell phone and PDAs. The only real down spot for Intel was lower motherboard sales and flat overall processor ASPs.

Intel expects fourth quarter revenue to come in between $10.2bn and $10.8bn. ®

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