Intc Ceo Brian Krzanich

Intel CEO Brian Krzanich's strategy delivered an earnings surprise in the second quarter. Source: Intel.

Intel (NASDAQ:INTC) just reported results for the second quarter of 2014. Encouraged by the report, Intel investors lifted the stock more than 4% in after-hours trading, setting new multi-year highs in the process.

The semiconductor titan saw sales rise 8% year over year to $13.8 billion. GAAP earnings rose 41% to $0.55 per diluted share.

The reported revenue fell in the upper half of Intel's updated guidance range. 64.5% gross margins were a 4.9 point sequential increase and 6.2 points year-over-year, and also exceeded the midpoint of Intel's mid-quarter guidance update.

The results also topped analyst estimates on both the top and bottom lines.

Although the data center group showed the strongest growth among Intel's divisions with a 19% year-over-year revenue boost, management pointed to a successful strategy of reaching into new markets.

"With the ramp of our Baytrail SoC family, we have expanded into new segments such as Chrome-based systems, and we are on track to meet our 40 million unit tablet goal," said Intel CEO Brian Krzanich in a prepared statement.

The company collected $5.5 billion in cash from operations. Free cash flows rose 35% year-over-year to $2.7 billion.

Management resolved to return more cash to shareholders, but did not promise any dividend increases today. Instead, Intel will continue to execute a generous share buyback program, which retired $2 billion worth of shares in the second quarter. This should double to $4 billion in the third quarter, rising share prices notwithstanding.

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Anders Bylund owns shares of Intel. The Motley Fool recommends and owns shares of Intel. Try any of our Foolish newsletter services free for 30 days.

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