Intel Corporation Earnings: Will Mobile Finally Bring Growth?

On Tuesday, Intel (INTC -2.40%) will release its quarterly report, and investors have finally started to feel some optimism about the stock's future direction. Even though Qualcomm (QCOM -2.36%) and NVIDIA (NVDA -10.01%) initially beat Intel to the mobile-chip party, Intel has put together a strategy for mobile that could allow it to capture its fair share of the market while still focusing on ways to make the most of its legacy business.

Intel was the chip king of the PC era, fending off competition from rivals and capturing commanding market share as a result. Yet when mobile devices became more popular, Intel didn't jump on the budding trends as quickly as NVIDIA and Qualcomm did, and that has cost it a lot of potential growth in recent years. Now, investors want to see if Intel can chart a successful path forward that will get the company into the game more seriously. Let's take an early look at what's been happening with Intel over the past quarter and what we're likely to see in its report.

Source: Intel Free Press, Flickr

Stats on Intel

Source: Yahoo! Finance

Can Intel earnings finally start growing again?
In recent months, analysts have been somewhat pessimistic about Intel earnings in recent months, cutting a nickel per share from their first-quarter estimates. But they anticipate Intel making up some of that lost ground later this year, and the stock has done well, rising 4% since early January.

Source: Intel

Intel's fourth-quarter earnings report gave investors a sense of just how critical a time the chipmaker faces right now. Intel's revenue was slightly better than expected, but much of that positive result came from sales of PC chips, whose declines appear to be slowing at least temporarily. But earnings fell short of what investors had wanted to see, and Intel projected flat earnings for 2014 as growth in server-chip revenue offsets the erosion of PC-related sales. The cloud-computing, networking, and storage businesses produced substantial growth, but those represent small divisions for Intel right now.

Recognizing the importance of standing up to competition from Qualcomm and NVIDIA, Intel has increasingly focused on delivering credible mobile products. In February, Intel said that its LTE-Advanced XMM 7260 modem group should come to market this quarter, with major hardware manufacturers having signed on to use both the XMM 7260 and its predecessor XMM 7160 product. That challenges Qualcomm in an area it has long dominated. Moreover, between Intel's Bay Trail platform and up-and-coming products like its Moorefield and Merrifield platforms, Intel is aiming at various performance points that could get used both for tablets and smartphones.

Another big area that Intel hopes to capitalize on is the wearable technology space. With a contest to encourage would-be developers to suggest ways to incorporate technology into wearable applications, Intel hopes to use the power of crowdsourcing to come up with its next big advance. If Intel can get a head-start in wearables, then it could make up for its sluggishness in mobile and finally find a new avenue to regain its leadership role from Qualcomm.

Still, Qualcomm isn't giving up without a fight. With its announcement last week about its next-generation mobile processor, the Snapdragon 810, Qualcomm has once again raised the bar on performance. That makes it all the more important for Intel to move forward on 14-nm products like Broadwell and Cherry Trail in order to give customers a better trade-off between performance and power consumption.

In the Intel earnings report, watch to see how the company defines its future strategy. With so much on the line and so many directions in which it could go, Intel needs to show investors how it will evolve beyond its PC focus and grow into the next generation of technology.

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