Thanks, Brian. 2016 was a record year for Intel and 2017 is off to a strong start. We executed on several important milestones in the quarter. We delivered on innovative product and technology roadmaps across the business, Fab 68 in Dalian continued its impressive ramp, and Intel's transformation continued with the planned acquisition of Mobileye for autonomous driving and the sale of the Intel Security Group. Revenue was $14.8 billion, up 7% year over year.
Operating income was $3.9 billion, up 20% year over year, and earnings per share of $0.66 was up 22% year over year. Our EPS performance was a result of strong top line growth and significant margin expansion. First quarter operating margin was 27%, up 3 points year over year, and gross margin came in at 63% up 0.5 points year over year. Direct spending came in at $5.4 billion, flat year over year and down 2 points as a percent of revenue from 2016 as we continued to execute on our restructuring program.
Let me touch briefly on our segment performance. The Client Computing Group had revenue of $8 billion, up 6% year over year. We continue to see the worldwide PC supply chain operate at healthy levels. Client ASPs were up 7% year over year as our segmentation strategies are paying off and core mix continues to be strong. This segment had yet another quarter of significant profit growth with operating profit growing over 60% from a year ago as the business continues to execute and benefit from continued improvements in 14-nanometer unit cost, richer product mix and lower spending, primarily from the Client business having a decreased share of technology development and SG&A allocations.
The Data Center Group had revenue of $4.2 billion, up 6% year over year. The Data Center Group had operating profit of $1.5 billion, down 16% year over year. Operating margin percent was impacted by increased allocation of technology development and SG&A costs, higher product costs as we transition to 14-nanometer and the ramp of adjacency products. Our Internet of Things business achieved revenue of $721 million, growing 11% year over year driven by strength in the industrial and video segments and continued momentum in our automotive business. Operating profit for the business was $105 million, down 15% year over year from increased investments in autonomous driving and increased allocation of SG&A and technology development spending. Our Memory business had record revenue of $866 million, up 55% year over year with strong demand for data center SSD solutions and demand signals outpacing supply.
We continue to make outstanding progress ramping Fab 68 with yields and unit costs well ahead of expectations. This segment had an operating loss of $129 million, largely driven by costs associated with 3D XPoint and startup costs for our memory capacity. The Programmable Solutions Group had revenue of $425 million. Operating profit was $92 million, flat year over year after adjusting for acquisition related impacts. Our Intel Security Group business had revenue of $534 million and operating profit was $95 million. Consistent with our prior guidance the Intel Security transaction closed at the beginning of the second quarter. Let me remind you of our capital allocation priorities and our progress. First, invest in our business, second, strategic acquisitions and third, return cash to shareholders through dividends and buybacks.
In the quarter we generated $3.9 billion of cash from operations. We repurchased $2 billion in capital assets, paid $1.2 billion in dividends, increased the dividend by 5% and repurchased about $1.2 billion of stock. In addition, we generated approximately $400 million from the sale of some of our interests in ASML, which generated $235 million of pre-tax gains. At quarter end, cash other long-term investments was $23.7 billion, up $600 million. Total debt was $25.8 billion.
Today we announced an increase in our share buyback authorization by $10 billion. Currently, we have approximately $15 billion authorization. We expect to continue to offset dilution from our stock-based programs and opportunistically reduce our outstanding share count over time. Now let me turn to guidance.
First, some context. First, while we see strong momentum and Client ASPs contributing to slightly higher expectations of revenue for the year, we continue to take a more cautious view of PC consumption versus third party analysts. We feel great about our annual cadence of product innovations with new product launches planned this year including Skylake for data center, eighth generation core, 64-tier 3D NAND SSDs and further extensions to our Optane product line. Second, we continued to see strong demand signals in our memory business through the year and our Fab 68 in Dalian ramping to be able to supply higher demand levels. Third, the Data Center business has solid momentum with the mid-summer launch of our next-generation Skylake processor. And forth, as I indicated earlier, we completed the sale of the Intel Security Group. We expect to realize a pre-tax gain of approximately $375 million and a tax liability of approximately $850 million. This results in a GAAP tax rate of 39% and a non-GAAP tax rate of 21% in the second quarter. And last, as Brian talked about earlier, we are committed to increasing efficiency as a company and we are making an important commitment to our owners today. We expect to reduce our spending as a percent of revenue by 2 points from 2015 to 2017 and our plans are to continue to drive efficiencies in how we operate the business over time.
We are establishing a spending target of approximately 30% of revenue which we expect to reach no later than 2020. As a result, we are raising our full-year revenue guidance by $500 million to approximately $60 billion and our EPS guidance by $0.05 to approximately $2.85 per share. As we look to the second quarter of 2017, we are forecasting the midpoint of the revenue range of $14.4 billion, up 11% year over year excluding Intel Security and up 6% including Intel Security. We expect operating margins to increase by 3 points year over year, gross margins to be up 1 point at approximately 63% and spending to be approximately $5.2 billion, flat year over year. We expect our spending as a percent of revenue to be down 2 points in the first half of the year versus last year, as we make solid progress in increasing efficiency in the company. We expect EPS to be approximately $0.68, up 15% year over year. We feel pretty good about where we are 90 days into our three-year journey. We exceeded our expectations for Q1 and increased our profit expectations for the full year. At the same time, we are investing in the future by expanding our TAM from $45 billion to $220 billion. We are already seeing an impact, with our growth-oriented businesses up double digits collectively as we continue to transform the company from a PC-centric company to a company of smart and connected devices that power the cloud. With that, let me turn it over to Mark.