Updated from 9:16 a.m. EDTInvestors hoping Intel's ( INTC) third-quarter report would stem a three-month swoon in the stock are waking up to a different reality Wednesday. Shares of the microprocessor giant fell 3% to $23, extending a swoon that has lopped 16% off the stock since it topped out at $28.32 on July 18. Investors chose to ignore solid revenue and margin numbers in the September quarter and focused on shaky revenue guidance for the current period. For the third quarter, Intel earned $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 was embedded in the First Call estimate for earnings of 33 cents a share; the 2-cent charge was not. The legal charge also dented gross margins, which came in at 59.7%. Backing the charge out, margins would have been 61.1%, 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. 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 buildup 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), which fell 1.2%. 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."