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Buy Intel Ahead of Earnings

NEW YORK ( TheStreet) -- Semiconductor giant Intel (INTC - Get Report) will report second-quarter earnings on Wednesday, July 17. Although it's not ground-breaking news to suggest that the company has fallen out of favor with Wall Street, it still seems that many investors are discounting the progress that Intel has made in the realm of mobile.

Although Intel does rely on the PC market for a significant portion of its revenue, the company's mobile advancements, albeit modest, are a step in the right direction.

I'm not suggesting that rivals such as ARM Holdings (ARMH) and Qualcomm (QCOM - Get Report) should start worrying about market share. But for investors with patience, Intel can still provide solid gains with each small step.

One of these small steps was taken recently when Samsung announced that it had chosen Intel's Clover Trail+ mobile chip processor to power a its Galaxy Tab 3, which is based on Google's (GOOG) Android platform. Although this would certainly be a great win for Intel, the news was dampened by new rumors that Apple (AAPL) had decided not to use Intel chips in new versions of its iPhones and iPads.

I won't discount that this would be a major blow to Intel, which is struggling to find its footing in the mobile market. But there are two frames of thought here. First, I believe the Street is still overstating Intel's reliance on the PC industry. Granted, this is an area where Intel owns a meaningful portion of market share. But the presumed "death of the PC" does not spell the death of Intel.

Second, investors are still discounting management's ability to adjust to the changing trend. Management has begun to reinvest in research and development, while laying down the foundation for the company's long term-success.

Accordingly, I believe that Intel has all of the makings of a successful turnaround story -- one that earned $2 billion in its most recent quarter (reported in April) -- meeting both its revenue and profit targets.

What's more, the company has begun to think differently, which means that investors must also adjust their views. Intel has begun to look for new revenue streams beyond its core competency. These include the home entertainment industry where the company has discussed the prospects of building a television. Say what you want about how competitive that space is. What is clear, though, is that management appreciates the new realities of "adapt of die."

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