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Can nothing trip up the runaway cash monster that is Intel? Well...

Most divisions show modest growth, with one big exception – that damn mobile tech

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Intel posted solid earnings for the second quarter of its fiscal 2014 on Tuesday, yet for all its encouraging growth, Chipzilla remains hard hit by the soft PC market and it still shows worrying weakness in the otherwise-booming mobile sector.

Total revenues for the three months ending June 28 were $13.8bn, a 7.8 per cent year-on-year increase that soundly beat analysts' estimates.

Better still, Chipzilla's net income for the quarter was way up from the year-ago period to $2.8bn, a 40 per cent gain. That in turn led to earnings of $0.55 per diluted share, which also beat the average prediction of the Wall Street bean counters.

As was the case in the previous quarter, Intel's Data Center division was the hero of the day. The group's net revenues for the quarter were $3.5bn, a 19 per cent gain annually, and CEO Brian Krzanich said in a conference call with financial analysts that Intel believes such double-digit growth is sustainable.

The PC Client division – which still accounts for the lion's share of Intel's revenues – fared less well but still showed some growth. Its net revenues were $8.7bn, a 6.2 per cent gain from the same period a year ago. Unfortunately, however, Krzanich said the company expects to see further softness in the consumer PC market in the second half of the year.

Intel's nascent Internet of Things division – which it only started breaking out as a separate line item in Q1 of this year – also offered some encouragement, with net revenues up 24 per cent from the year-ago quarter. But given that this division only brought in $539m during the period, or 4 per cent of the total, it's hardly a bellwether for Intel's future success.

Neither is Chipzilla's Software and Services division, which also includes security outfit McAfee. That group pulled in another measly $548m, a 2.6 per cent year-on-year gain.

Still, all of these groups managed to show growth, and Krzanich said the quarter exceeded even Intel's own expectations. "Our second-quarter results showed the strength of our strategy to extend the reach of Intel technology from the data center to PCs to the Internet of Things," the CEO said in a canned statement.

But there was one arm of Intel's strategy that Krzanich neglected to mention in his prepared remarks – mobility – and this is the area that should have investors' alarm bells ringing.

Revenues for Intel's Mobile and Communications group, which builds not just chips for smartphones and fondleslabs but also such components as mobile radios and power management chips, plummeted 82.5 per cent as compared to Q2 of 2013, to land with a thud at just $51m.

Intel has long struggled to gain a foothold in the mobile device market, and despite Krzanich's claim that the company is squarely on track to ship 40 million Intel-based tablets in 2014, Chipzilla still poses little threat to segment leader ARM Holdings and its various chipmaker partners.

When asked by a financial analyst what Intel planned to do to reverse this spiraling trend, Krzanich pointed to Intel's forthcoming SoFIA mobile platform, which it is developing in partnership with Chinese fabless semiconductor company Rockchip.

"Clearly we don't go into business to lose money and we believe that over time we can make [mobility] a profitable business," Krzanich said.

And tomorrow, and tomorrow ... but investors seemed content on the whole, and Intel's share price climbed 4 per cent in after-hours trading following the call. ®

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