Updated from 4:29 p.m. EDT

Atheros ( ATHR) grew its bottom line more than 50% in the third quarter, as strong demand for wireless networking chips continued to buoy the company.

Investors bid up shares of Atheros in extended trading, following the strong earnings report, a better-than-expected forecast for the current quarter and details of a new chip the company hopes will accelerate its push into consumer electronics markets.

Shares of Atheros, which gained 5%, or $1.47, in regular trading Monday ahead of the earnings release, increased an additional 5.4% to $31.54 in extended trading.

Atheros said the latest version of its ROCm Wi-Fi chip consumes 70% less power than existing products and is capable of drawing "virtually" zero power while operating in standby mode, making it ideal for battery-powered gadgets like smart phones and digital cameras that increasingly connect to the Internet.

"We think this a tremendously competitive product, both for power-consumption, cost and form-factor reasons," CEO Craig Barratt told analysts in a post-earnings conference call.

The real moneymaker for Atheros right now is its more established business providing chips for the wireless networking routers sold by retailers and telecommunications carriers. Sales in Atheros' networking group increased 17% sequentially, with strength in both the 802.11g, and the newer 802.11n, standards.

According to Atheros, it now has deals to provide 802.11n chips to the top four retail vendors of Wi-Fi routers.

Sales in the three months ended Sept. 30 totaled $106.3 million, up 33% from this time last year and in line with Wall Street expectations.

The Santa Clara, Calif., chipmaker earned $9.7 million in net income, or 16 cents a share, vs. $6.3 million, or 11 cents a share, in the year-ago period.

Excluding stock compensation expenses as well as charges for certain amortization of aquired intangible assets, Atheros said it earned 28 cents a share.

Analysts polled by Thomson Financial were looking for EPS of 26 cents, excluding stock compensation, although it was not immediately clear if the amortization charges were also excluded from the estimates.

The one weak spot was in the company's business providing Wi-Fi chips to PC makers, where sales decreased $2.8 million sequentially, after an exceptionally strong second quarter.

What's more, Atheros said it was losing market share at one particular PC customer, putting a drag on its fourth-quarter results. Executives declined to provide details about the extent of the share loss or what was causing it.

"There are cases where competitors can be particularly aggressive. There can be some must-win accounts or platforms ... where they can do whatever it takes to win," said Barratt. "We view this as just one round in an ongoing battle."

Despite the share loss, Atheros said it expected to grow sales in all its major business units -- including the PC group -- in the quarter, leading to the company's 11th consecutive quarter of sequential revenue growth.

The company projected revenue between $112 million and $115 million, with 30 cents EPS.

Analysts polled by Thomson Financial were looking for $113.7 million in revenue with EPS of 28 cents.