Intel beats on top and bottom line; stock surges

Intel's Q2 earnings surprise
Intel's Q2 earnings surprise   

Intel delivered results Wednesday that topped analysts' expectations. (Tweet This)

The Santa Clara, California-based chipmaker posted second-quarter earnings of 55 cents per share on revenue of $13.2 billion. Wall Street had expected 50 cents a share on $13.04 billion, according to consensus estimates from Thomson Reuters.

Shares of Intel surged as high as 8 percent in extended hours.

On a conference call Wednesday, the company announced it expects the personal computer market to be weaker than previously expected for 2015. Full-year guidance is for revenue to fall by approximately 1 percent, Intel said in its earnings release.

"Second-quarter results demonstrate the transformation of our business as growth in data center, memory and IoT accounted for more than 70 percent of our operating profit and helped offset a challenging PC market," said Intel CEO Brian Krzanich in the release.

The company attributed the beat to growth in its data centers and "Internet of Things" businesses, which helped offset weak demand for PCs that use its chips. Intel reported data center group revenue was $3.9 billion, 5 percent higher sequentially and up 10 percent from the year-earlier period.

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"When you look at the combination of the data center, which is the largest, the memory business and our Internet of Things business, it's now 40 percent of our revenue and it accounts for 70 percent of our operating profit," Intel's CFO, Stacy Smith, said in an interview on CNBC's "Closing Bell" Wednesday. "That's grown dramatically over the last couple of years."

The company's net income fell to $2.71 billion for the quarter, which ended June 27, from $2.8 billion a year earlier. Earnings per share, however, were flat at 55 cents, due to a fall in the number of weighted average shares outstanding. Net revenue dropped to $13.19 billion from $13.83 billion.

PC: Not dead, yet
PC: Not dead, yet   

Intel generated about $3.4 billion in cash from operations, paid dividends of $1.1 billion and repurchased 22 million shares of stock for $697 million.

Earlier this month, the company announced several organizational changes. Among them, Intel President Renee James will step down to pursue an external CEO role. She will remain with the company until January.

Shares of Intel have dipped about 6 percent over the last 12 months.

—Reuters contributed to this report.