updated 10/17/2006 5:06:13 PM ET 2006-10-17T21:06:13

Intel Corp. reported a 35 percent decline in third-quarter profits and a 12 percent decline in revenues Tuesday, but the chip maker beat Wall Street’s tepid expectations and shipped record numbers of microprocessors for mobile devices and computer servers.

Net income for the three months ended Sept. 30 was $1.3 billion, or 22 cents a share, compared with $2 billion, or 32 cents, in the same period last year.

Revenue fell to $8.74 billion from $9.96 billion.

Analysts had been expecting profits of $1.01 billion, or 17 cents a share, on sales of $8.62 billion, according to a survey by Thomson Financial.

Intel began initial shipments in the third quarter of the world’s first “quad-core” processor chips — the powerful brains that allow a computer to function. The shipments are months ahead of those expected from Intel’s nimble rival, Advanced Micro Devices Inc., which has been dramatically gaining market share that Intel once had nearly to itself.

Intel’s chief financial officer Andy Bryant expressed confidence Tuesday that performance would improve in upcoming quarters. Revenue in the current quarter is expected to be between $9.1 billion and $9.7 billion, in line with analysts’ expectations averaging $9.46 billion.

“We lost market share and were under price pressure,” Bryant said in a phone interview with The Associated Press after the earnings were released. “We still have to live with tough year-over-year comparisons ... but we think the worst is behind us.”

Last month, Intel announced the elimination of 10,500 jobs — about 10 percent of its work force — through layoffs, attrition and the sale of underperforming business groups as part of a massive restructuring. The cuts were expected to save the company $3 billion per year by 2008.

For the first nine months of the year, Intel’s net income fell 42 percent, to $3.54 billion from $6.21 billion in the year-ago period. Revenue declined 10 percent, to $25.69 billion billion from $28.63 billion.

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