Intel Corporation (INTC): Can an Exciting Development Bring this Chip Maker Back to Life?

It’s been a rough year for Intel Corporation (NASDAQ:INTC) investors.  Their stock has suffered from the one-two punch of a collapsing stock price and the popular belief that its core business is going the way of the buggy whip.  Shares of this technology behemoth wallow at multi-year lows after losing more than a quarter of their value since the spring of 2012.

Intel Corporation (NASDAQ:INTC)’s woes were exacerbated when the company’s fiscal fourth-quarter and full-year results landed on the market with a thud.  Financial pundits were quick to confidently proclaim that the personal computer is sure to go extinct along with the dodo bird.  Assuming that the PC is indeed dead technology, then the impetus is on Intel to finally make headway into the mobile market that has so far eluded the semiconductor company.  While progress on this front has been painfully slow, there may be indications that Intel is finally getting its act together.  If this is true, will this mark the beginning of Intel’s rise from the ashes?

Good riddance to 2012, an intriguing possibility in 2013

Indeed, Intel Corporation (NASDAQ:INTC)’s fourth-quarter results were poor. There’s no sugarcoating the fact that earnings for the quarter dropped 27% year over year. Revenues fell 3% versus the prior year’s fourth quarter, and the company expects another 6% decline in revenues for the current quarter. For the full year, revenues and earnings per share dropped 1.2% and 11%, respectively. To add to investors’ misery, the market got spooked about Intel’s plan to spend $13 billion on capital expenditures next year. Gross margins are heavily scrutinized for a semiconductor company such as Intel, and the market wasn’t pleased to see margin contraction of almost seven percentage points from last year’s fourth quarter.

However, there may a reason for investor optimism about Intel’s frustratingly slow entry into the mobile chip market.  At the 2013 Mobile World Conference, Intel Corporation (NASDAQ:INTC) CEO Paul Otellini touted the company’s chips in 10 phones shipping in 20 countries (though not the U.S.), and it keeps improving its power consumption and performance.

At the same conference a year ago, Intel’s mobile chips were almost nonexistent.  Specifically, Intel points to its Clover Trail chip as a means of significantly penetrating the smartphone market.  Furthermore, Intel now believes it has made significant progress on power consumption, an issue that had previously hampered the company’s reputation.  Intel now believes its chips are as efficient as those offered by ARM.