Intel said profit was 2.0 billion dollars in the third-quarter of the year, up 26 percent on the previous quarter, with earnings per share of 35 cents, slightly better than analysts' forecasts of 34 cents.

Revenue in the third-quarter rose to 10.2 billion dollars, in line with expectations and up one percent from the same period last year.

"Intel delivered the best third-quarter revenue in its history," said Paul Otellini, Intel president and chief executive.

"As we look to the fourth quarter, it is hard to know what impact the financial crisis will have on end customer demand," he said.

Intel said its gross margin of 58.9 percent was up from 55.4 percent in the second-quarter with the increase driven primarily by lower microprocessor unit costs and higher microprocessor revenue.

Intel's share price shed 6.24 percent in New York on Tuesday as technology stocks dropped overall but rose by 4.27 percent to 16.61 dollars in after-hours trading after it announced its results.

The company said it expected revenue to be between 10.1 billion dollars and 10.9 billion dollars in the fourth-quarter including a restructuring charge of 250 million dollars from the closure of a joint venture with Micron in Idaho which makes NAND flash memory.

But it cautioned: "Current uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters."

Intel said spending on research and development for the year was expected to drop to 5.9 billion dollars, lower than the previous expectation of 6.0 billion dollars.

It said the total microprocessor average selling price was lower or flat if excluding shipments of Intel Atom microprocessors.

Intel also said revenue in the Americas fell slightly in the third-quarter from the second-quarter, from 21 percent to 19 percent, while it rose in the Asia-Pacific region from 51 percent to 53 percent.

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