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Intel surges to record chip sales, buoyed by strong PC sales

Intel surges to record chip sales, buoyed by strong PC sales

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Intel reported better than expected second quarter earnings today, buoyed on stronger than expected sales from its PC client, data center, and internet of things groups. The company also offered up a forecast for its next quarter that came in ahead of what many were expecting, suggesting a recovery for what's been a declining PC business.

Thanks to surprisingly strong PC sales

Intel reported second quarter earnings of $2.8 billion, or 55 cents per share on revenue of $13.8 billion. Wall Street was expecting earnings of 52 cents on revenue of $13.7 billion. Leading the way, as usual, was the company's PC client group, which pulled in $8.7 billion in revenue and set a new quarterly record for unit sales. Last month, the company tipped its hand that stronger than expected PC demand would add an extra $700 million to its quarterly revenue, the first increase for that group since late 2009.

On an earnings call with analysts following the news, Intel attributed the surge of PC chip buying to a variety of factors: from some 600 million systems being four years or older, new prices for its chips, and Microsoft's retirement of Windows XP. The company added that it sees this trend lasting through the rest of this year, though would not weigh in on if it expects it to continue beyond that.

Not so hot was the company's mobile and communications group, which plummeted. This quarter it brought $51 million in revenue, down 67 percent from last quarter and 83 percent from the same quarter the year before. Earlier this year, Intel said it was beginning to see what its CFO Stacy Smith referred to as "strong tablet growth," an area where the company was late to offer up chips that competed with processors from ARM. Today, Intel said it was "on track" to meet a goal of getting its chips into 40 million tablets, shipping 10 million of those during this quarter. The company also said that its first 14 nanometer Broadwell chips would be available for the holidays.

14 nanometer chips are coming very soon

Intel said its upcoming third quarter will bring in $14.4 billion in revenue, which could go up or down by $500 million. On average, analysts were expecting Intel to forecast $14 billion.

Intel is among the first technology companies to report its earnings this month. Yahoo also reported today, and Google reports later this week.

Update July 14th, 5:22PM: With details from the company's conference call with analysts.