Now I will turn the call over to Bruce.

Bruce E. Kiddoo

Thanks, Venk. I will review our third quarter financial results. Revenue for the third quarter was $571 million, down 3% from the second quarter. Our revenue mix by major market in Q3 was approximately 41% for consumer, 27% industrial, 17% communications and 15% computing. Our consumer business declined slightly, due to seasonal trends. Our industrial business was flat as distributors stopped producing inventory. Our communication business was down slightly due to continued weakness in base stations, partially offset by the end of the inventory correction in fiber optics.

Our computing business was down across most segments. Gross margin, excluding special items, was 60.4%, essentially flat with the prior quarter. Unfavorable variances from lower utilizations were offset by lower spending and lower inventory reserves. Special items in Q3 gross margin were intangible asset amortization from acquisitions.

Operating expenses, excluding special items, were $214 million, down 4% from Q2. Salary expense declined in Q3 because Q2 was a 14-week quarter. Special items in Q3 operating expenses were primarily acquisition-related charges. The impairment of excess manufacturing assets and a gain from the sale of a building.

Special items and discontinued operations were approximately $32 million in after-tax gain from the sale of our clock synchronization and next-generation 12-gig storage product lines. Q3 GAAP operating income, excluding special items, was $131 million or 23% of revenue. The Q3 GAAP tax rate, excluding special items, was 24% compared to 26% in the prior quarter due to ongoing improvements from our international tax structure.

Special items in the Q3 tax rate included prior period cost-sharing expenses related to our international restructuring. GAAP earnings per share, excluding special items was $0.33, down slightly from $0.34 in Q2 as lower operating expenses and lower tax rate offset the lower revenue.

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