UPDATE 3-Intel reports mixed quarter, delays cutting-edge chip
(Adds detail on Broadwell launch, background on stock)
SAN FRANCISCO, Oct 15 (Reuters) - Intel Corp's third-quarter results modestly beat expectations on Tuesday, but its current-quarter revenue outlook fell short and it warned that production of its upcoming Broadwell processors was delayed.
The world's top chipmaker is betting that its current Haswell PC processor with improved battery life will boost sales for the rest of 2013, beyond the typically strong third quarter when PC manufacturers buy chips in anticipation of holiday demand.
But preparations for the Broadwell chip, which will succeed Haswell, have fallen behind projections by about three months due to technical setbacks, Brian Krzanich told analysts on a conference call following Intel's quarterly report on Tuesday.
He said production of the Broadwell chips, based on the 14 nanometer technology that is ahead of rivals' technology, will not begin until the first quarter.
"We and our (manufacturing) partners have a strong desire to get Broadwell to the market," Krzanich said. "This is a small blip in the schedule."
With consumers increasingly favoring tablets and smartphones, Intel is wrestling with a slowdown in its core PC market while trying to make inroads in low-power mobile devices.
Intel said its gross margin in the third quarter was 62.4 percent, and it forecast 61 percent for the fourth quarter. Analysts had expected 60.92 percent for the third quarter and 60.98 percent for the fourth quarter.
The resilient gross margins suggest Intel is not trimming its output ahead of upcoming new processors, risking a future inventory imbalance, said Evercore analyst Patrick Wang.
"It doesn't look like they're taking any cut in utilization to burn off inventory," Wang said. "This could mean there's still a bit of a problem down the road."
Adapting to the slow PC industry, Intel also trimmed its 2013 capital expenditure target to $10.8 billion, plus or minus $300 million, from $11 billion, plus or minus $500 million.
Since taking the helm in May, Krzanich has pushed to improve Intel's offering of chips for mobile devices. It recently announced a lineup of ultra-small chips for wearable devices, which are growing more popular.
Intel dominates the PC industry but it was slow to adapt its chips for low-power mobile gadgets like smartphones and tablets.
Krzanich has promised Intel's new Bay Trail mobile chip would find its way into a slew of tablets, but it is still unclear how much progress is being made and how much those mobile chips, which sell for less than Intel's latest PC chips, may affect its gross margins.
Some analysts believe the PC industry's troubles are already baked into the price of Intel's stock, which has risen about 14 percent in 2013, less than the Standard & Poor's 500's increase of 20 percent.
Intel shares trade at 12 times expected earnings, only slightly less than rival Qualcomm Inc's at 14 times earnings.
Intel posted net earnings of $2.95 billion, or 58 cents a share, compared to $2.97 billion, or 58 cents share, in the year-ago quarter. Analysts had expected earnings per share of 53 cents, according to Thomson Reuters I/B/E/S.
Revenue was $13.48 billion, barely changed from $13.46 billion in the year-ago quarter. Intel forecast revenue of $13.7 billion, plus or minus $500 million for the current fourth quarter.
Analysts had expected $13.463 billion in revenue for the third quarter and $14.004 billion for the fourth quarter.
Shares of Intel were down 2.31 percent in extended trade after closing down 0.26 percent at $23.39 on Nasdaq.
(Reporting by Noel Randewich; Editing by Richard Chang)