Santa Clara (CA) - Intel’s second quarter earnings beat analyst expectations and jumped 15 percent over the 2004 quarter. While revenues in traditional key areas such as networking and desktop processors remained basically flat, much of the gains came from an improved server business as well as a booming mobile segment.

Intel’s financial results typically serve as a good indicator of trends in the computer industry. It was not only the first company that sent out an earnings warning to investors before the IT industry recession entered a painful recession at the end of 2000, it was also one of the first IT firms that hinted about two years ago that times may improve again. With this in mind, and Intel’s most recent quarter announcement, the chip industry appears to be a great shape.

Compared to the second quarter of 2004, revenues climbed 15 percent to $9.2 billion, the best result for an Intel Q2 ever. Sequentially, revenues were down two percent, which is better than expected given the fact that Q2’s always are a bit slower than the first quarter. Net income jumped 16 percent to $2.0 billion (down 6 percent sequentially). The company also hit a new record high in employment : According to chief financial officer Andy Bryant, more than 91,000 people currently work for Intel.

In detail, however, Intel’s results revealed several key trends for the company itself and the industry as a whole. Chief executive Paul Otellini mentioned that desktop processor shipments reached a new record level, but revenues were essentially flat compared to Q2 of 2004. Average selling price was lower, due to increased shipments of Xbox processors, according to Bryant. But Intel may also enter a time where shipment gains cannot outpace the speed processor profits are declining and growth in this segment could be very limited.

Growth is happening somewhere else : $2.1 billion or about 23 percent of Intel’s revenues are coming from mobile processors. This represents an increase of 66 percent year-over-year ; earnings in this segment climbed 92 percent in the same time frame. The mobility group as a whole, which also includes for example products for cellphones achieved 34 percent of Intel’s revenues. Centrino allows Intel to cash in on a continuing trend of consumers moving away from the desktop to mobile computers. According to the company, the current Centrino platform (Sonoma) has become the company’s fastest-ramping mobile platform ever, accounting for over 50 percent of performance mobile shipments in the first full quarter after launch.

Intel appears to also have recovered from a weak server product line in 2004. New product launches that prep especially the Xeon DP and MP platforms for upcoming the dual-core chips Paxville and Dempsey processors achieved double-digit growth compared to Q2 2004, according to Otellini. However, the gains were not able to keep pace with the growth of the mobility group - the enterprise group contributed 65 percent to all revenues, down five percent from one year ago.