Intel Corporation (NASDAQ:INTC) released its earnings report for the second quarter of 2013 yesterday. The report showed that the company was losing revenue faster than expected as the personal computer market continues to disappear.


Intel Corporation (NASDAQ:INTC) stock fell by close to 4% on today’s market after the release of that report. The market clearly isn’t confident in Intel’s ability to fix the issues with its business.

Intel’s Competency Problems

Intel Corporation (NASDAQ:INTC) is a great company, and it is excellent at what it does. That’s what has led it to a near monopoly on personal computer processors. The company also seems acutely aware of the changes in the computing industry. It has already launched chips that are, according to Intel at least, performing at the same level as competitors.

All of this feeling about the company may serve to distract from the secular trends. Intel Corporation (NASDAQ:INTC) is fantastic at what it does, but what it does may not be as profitable any more. It’s the same thing that happened to companies like Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) when smartphones came out. Nokia was still making exceptional phones, better on a lot of metrics than the Apple Inc. (NASDAQ:AAPL) offerings, but people didn’t want them any more.

Intel Corporation (NASDAQ:INTC) investors may be conflating the ability of Intel to outperform in its current market with its ability to make the leap into an entirely new market segment. Investors should be nervous if the company continues on its current path, with declining revenue and an increase in promises from the chip maker.

Microsoft Connection

Intel Corporation (NASDAQ:INTC) is tied to Microsoft Corporation (NASDAQ:MSFT) after years of working together. That bond is the only thing that seems able to save Intel’s personal computer business right now. Intel needs Microsoft Corporation (NASDAQ:MSFT) tablets to succeed.

The high powered tablets running Windows 8 all use similar chips to those in ultrabooks. If Windows tablets become a meaningful part of the mobile market, Intel will have been thrown a lifeline. Apple Inc. (NASDAQ:AAPL) and others are unlikely to jump on the opportunity to change processor architecture unless there is a meaningful improvement on the Intel side.

Intel is performing a balancing act, with declining revenue on one side, and a long list of promises on the other. If results do not materialize from those promises, there’s only one way the firm’s stock can go.