updated 10/16/2007 8:05:07 PM ET 2007-10-17T00:05:07

Intel Corp.’s profit leaped 43 percent in the third quarter as a massive restructuring and swelling microprocessor demand helped the world’s largest semiconductor company glide past Wall Street’s already-bullish expectations.

The Santa Clara-based chip maker said Tuesday it earned $1.86 billion, or 31 cents per share, in the three months ended in September. That beat by a penny the average estimate of analysts surveyed by Thomson Financial, and it’s 43 percent higher than the $1.3 billion, or 22 cents per share, Intel earned in the year-ago period.

Intel is profiting from robust worldwide PC sales that are driving up demand for microprocessors, which act as the brains of those computers.

On a conference call Tuesday to discuss the earnings report, management dismissed concerns by some analysts that PC makers may have overestimated their need for microprocessors and ordered too many chips. Intel officials said the company expects demand to remain robust and justified their higher financial targets.

Intel on Tuesday also announced that Chief Financial Officer Andy Bryant was named chief administrative officer, effective immediately. His replacement as CFO is Stacy Smith, an Intel employee since 1988 whose latest job was assistant CFO.

Higher sales of microprocessors helped the company offset flat average selling prices. Revenues for the period were $10.09 billion, a 15 percent jump from the $8.74 billion in sales rung up last year.

The sales surprise helped jolt Intel’s stock. Analysts were expecting $9.62 billion in revenues, a figure already boosted by a surprise mid-quarter financial update by Intel last month that came the same day as smaller rival Advanced Micro Devices Inc. launched its highly touted new Opteron brand server chip.

While it’s competing fiercely for market share with AMD, Intel has also been aggressively cutting costs, including the elimination of 10,500 jobs, about 10 percent of its work force, announced in September last year, to save about $3 billion annually by 2008. Intel said in April that it had completed the restructuring but would continue to look for ways to cut costs.

On the conference call, management said Intel is now shrinking its work force by another 2,000 employees and aims to exit the fourth quarter with 86,000 workers worldwide.

“We’ve made remarkable improvement,” Bryant said in an interview after the report was released. “All things are going pretty well right now.”

The third quarter was nevertheless a tough one for Intel from a legal standpoint, as regulators in Europe and South Korea separately charged the company with antitrust violations for allegedly abusing its market dominance to thwart rivals from encroaching on more of its turf.

Some of those charges echoed allegations by AMD in a landmark antitrust lawsuit filed in 2005 accusing Intel of illegally forcing key customers into exclusive deals to stunt AMD’s growth. A trial is scheduled for 2009 in Delaware federal court.

Intel, which commands three-quarters of the worldwide microprocessor market, denies the allegations and defends its business practices as legal and beneficial to consumers.

Despite the legal woes, investors were energized Tuesday by Intel’s upbeat financial forecast.

Sales in the fourth quarter are expected to be between $10.5 billion and $11.1 billion, topping analysts’ prediction of $10.42 billion.

They were also heartened by improvements in Intel’s gross profit margin, a key figure scrutinized by analysts to gauge how well a company is managing its pricing and manufacturing costs. It refers to a company’s profit on each dollar of revenue once the cost of actually making the products is stripped out.

Intel’s gross margin is expected to rise from 52 percent of revenues in the third quarter to about 57 percent, plus or minus a couple of percentage points, in the fourth quarter.

The battle with AMD has taken its toll on Intel, including a 42 percent drop in Intel’s profits last year.

But investors have driven up Intel’s stock price, boosting its market value by more than $60 billion since the July 2006 launch of a new chip lineup that’s helped Intel steal back market share lost to AMD.

On Tuesday, Intel shares rose $1.40, or more than 5 percent, to $26.88 in after-hours trading, after finishing down 27 cents during the regular session at $25.48.

By comparison, investors have punished AMD’s stock, sending it down from above $40 early last year to around $14 now, a decline that’s wiped out about $12 billion in shareholder wealth.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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