Updated from 5:31 p.m. EDT

Intel ( INTC) boosted revenue by 18% year over year, including a legal charge, but the company missed analysts' earnings expectations by a penny.

The giant chipmaker also said sales in the fourth quarter are likely to be a bit below Wall Street's estimates, largely due to a $100 million inventory buildup in the third quarter.

Although the build represents only about two days of chip shipments, "inventory" is a scare word in the semiconductor world, and it probably accounted for some of the stock's downward movement following the announcement, said RBC Capital Markets analyst Apjit Walia.

Intel slipped 77 cents a share, or 3.3%, to $22.95, in after-hours trading following the earnings announcement late Tuesday. The news also hit the Semiconductor HOLDRs ( SMH) exchange-traded fund, which fell 1.2%.

The company earned a profit of $2 billion, or 32 cents a share, including a 4-cents-a-share charge related to repatriated earnings and a 2-cents-a-share legal charge. The 4-cent charge had been included in the company's guidance and First Call estimates, but the unexpected 2-cent charge was not. On that basis, analysts were expecting a profit of 33 cents a share.

The legal charge dented gross margins, which came in at 59.7%. Backing the charge out, margins would have been 61.1%, which was the at the high end of the company's guidance, CFO Andy Bryant said in a brief interview.

Total revenue in the September quarter was $9.96 billion, up 8% sequentially. Net income of $2 billion was up 5% year over year and down 2% sequentially.

Analysts had expected the company to post revenue of $9.92 billion in the third quarter.

CEO Paul Otellini expressed satisfaction with the quarter, saying, "We achieved all-time records in company revenue and unit shipments across all of our major product lines."

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