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Updated from 4:46 p.m. EDT



tightened its third-quarter sales goal around the midpoint of its original target late Thursday as the company continues to address supply issues.

The company's action was expected by many, as Intel is still dealing with an inability to meet all demand for its desktop chipsets, a factor that held back results in the second quarter.

Intel acknowledged this ongoing condition but said the quarter is proceeding overall as expected, with continued healthy growth in the PC market, especially for notebooks. "There is no real surprise in the revenue line," said CFO Andy Bryant during a conference call.

However, investors showed they were expecting a marginally better report. Shares edged down 0.7% to $25.91 in late trading after the update.

Intel expects sales between $9.8 billion and $10 billion and gross margins that will likely be slightly above 60%.

At the quarter's start, Intel predicted sales between $9.6 billion and $10.2 billion and gross margins of 60%, plus or minus a couple of points.

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Analysts were expecting sales of $9.92 billion and earnings of 36 cents a share, on average, according to Thomson First Call.

Intel said its tax rate will be higher than anticipated during the current quarter by an unspecified amount because of an additional $250 million in taxes paid on the repatriation of about $6.3 billion of foreign earnings.


disclosed last month in an


filing that it might have to pay up to $350 million in taxes related to repatriated earnings. The company's targeted tax rate was 30.5%.

The midpoint of Intel's revenue target -- $9.9 billion -- represented a 15% increase from the same quarter last year and a 5.7% rise from the second quarter. Intel typically garners sequential growth in the third quarter closer to 7%.

Intel investors have bailed out of the stock since its second-quarter report in mid-July. Since then, shares dropped from a one-year high of almost $29 to a three-month low of $25.50.

Ahead of Thursday's announcement, Intel investors lifted the shares back above $26, but those gains faded in the wake of the Santa Clara, Calif.-based company's update.