Intel also gave sales guidance for the current quarter that was below Wall Street forecasts, and the news sent its stock sinking about 2 percent in after-hours trading.

"I think it's the go-forward margin and revenue numbers that are disappointing," said Ron Kiddoo, chief investment officer of Champaign, Illinois-based Cozad Asset Management, which holds shares of Intel in its portfolios. "Earnings were pretty good, but their top line was little bit light."

The biggest maker of chips for PCs reported net earnings of $885 million, or 15 cents a share, for the quarter, down from $2 billion, or 33 cents a share, a year earlier. Excluding stock option-related expenses, earnings per share were 19 cents. Analysts had been forecasting 13 cents a share.

Sales slid 13 percent to $8 billion, short of Wall Street forecasts, while operating expenses jumped 21 percent, the company said.

Looking ahead, Intel said sales for the current quarter are expected to be $8.3 billion to $8.9 billion, short of analysts' expectations of $9 billion, according to analysts surveyed by Thomson First Call.

"Gross margins were really good - I didn't expect them to be this high," said Martin Kariithi, an analyst with Technology Business Research.

But the company lowered its forecast for gross margins, a key measure of profitability, for the current quarter to 49 percent, short of Wall Street's expected 52.1 percent.

By: DocMemory
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