Intel buys software business from Canada's Pivot Technology in 5G push

FILE PHOTO: Computer chip maker Intel's logo is shown on a gaming computer display during the opening day of E3, the annual video games expo revealing the latest in gaming software and hardware in Los Angeles, California, U.S., June 11, 2019. REUTERS/Mike Blake

(Reuters) - Intel Corp INTC.O has agreed to purchase a software business from Toronto-based Pivot Technology Solutions Inc PTG.TO for $27 million, the U.S. chipmaker said on Tuesday.

Intel said it would buy Smart Edge, a software that helps split up data and store it closer to users to make computing devices respond faster.

The software is designed to run on Intel’s chips, which are best known as the heart of most personal computers but which the company is aiming to sell into equipment for 5G, the next generation of wireless data networks that is being rolled out starting this year.

According to Pivot’s securities filings, Smart Edge did not generate significant revenue in the first six months of 2019, but made a loss of about $1 million before depreciation and amortization. Pivot, which has a market value of about $43 million, was issued a U.S. patent on Smart Edge’s technology in July.

Intel, which expects to close the Smart Edge deal in the fourth quarter, views 5G as a chance to expand its sales beyond personal computers and data centers, its two largest business segments.

In 5G networks, more data will be stored on computers scattered near cell towers and other network gear. Storing the data there, a practice called “edge computing” in the industry, is expected to help large files like videos show up more quickly on users’ screens than if they were stored in centralized data centers.

“We plan to take full advantage of our combined technologies and teams to accelerate the development of the edge computing market,” Dan Rodriguez, a general manager of the network compute division in Intel’s data center group, said in a statement.

Intel’s shares rose nearly 1% to $52.15 in morning trade, while of Pivot Technology stock gained 4.9% to C$0.70.

Reporting by Stephen Nellis in San Francisco; Editing by Kenneth Maxwell and Sriraj Kalluvila