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Intel to Acquire Smart Edge Platform From Pivot for $27M

Zacks Equity Research

Intel INTC recently signed an agreement to purchase Smart Edge platform business from Canada-based Pivot Technology Solutions for $27 million in cash. The latest deal adds momentum to the chipmaker’s push into the emerging edge computing and 5G networking infrastructure market.

Notably, Smart Edge offers communications service providers and enterprises with a secure and scalable cloud-based multi-access edge computing (MEC) platform.

This will enable customers to facilitate cloud-like services nearer to user whether across network edge on-premise. This in turn reduces customer’s total cost of ownership and boosts operational efficiencies.

Details of the Acquisition

Intel’s Xeon Scalable processors can be integrated with Smart Edge software. The chipmaker aims to enable Smart Edge platform support to Intel FPGAs, Intel Optane memory and other accelerators, going ahead.

Further, Smart Edge’s software complements Intel’s open-source based OpenNESS (Open Network Edge Services Software) toolkit. Notably, Intel’s OpenNESS project aids developers in designing innovative applications to explore edge computing and 5G use cases.

The acquisition is also expected to enhance the chipmaker’s strength in providing robust edge inference SoCs.

Additionally, both Pivot and Intel inked a three-year Preferred Partner Agreement. Per the deal, Pivot will sell Smart Edge solutions and be a non-exclusive preferred channel partner and system integrator for the same.

Per Pivot Technologies, the buyout is slated to conclude by fourth quarter of 2019 subject to customary closing conditions. Post the closure, around 25 employees working with Smart Edge will be a part of Intel’s Network and Custom Logic Group (NCLG).

Strengthening Edge Computing Domain Holds Promise

Edge computing technology involves processing data closer to the edge of a user’s network, wherein the data is generated and not across a centralized warehouse for data-processing.

Notably, accelerated deployment of 5G facilitates edge computing and is expected to be a tailwind for Intel’s growing focus on enhancing edge computing vertical.

Intel Corporation Price and Consensus

Intel Corporation Price and Consensus

Intel Corporation price-consensus-chart | Intel Corporation Quote

Per company’s estimates, “5G will create $10 trillion in economic output by 2035” backed by secular growth in data, connected devices and growing clout of cloud-computing, and edge-computing applications.

The chipmaker estimates silicon addressable market for “computing in the network and at the edge” to hit $65 billion by 2023.

Further, per Gartner, 65% of infrastructure service providers worldwide are anticipated to earn 55% of revenues via edge-related services by 2021.

We believe Intel’s push into the emerging 5G infrastructure and edge computing market favors the company’s prospects in the longer haul.

Zacks Rank & Stocks to Consider

Currently, Intel carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Alteryx AYX, Synopsys SNPS and Keysight Technologies KEYS, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Alteryx, Synopsys and Keysight is currently pegged at 17.62%, 12% and 10%, respectively.

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