Earnings Preview: Partners Say Intel Is 'On The Right Track' In Focus On Cloud, Connected Devices

Intel partners say the company's focus on cloud services and the Internet of Things (IoT) positions it for growth, ahead of the Santa Clara, California-based company’s earnings call on Tuesday.

"I think Intel is clearly on the right track in terms focusing on cloud and connected devices,’ said Kent Tibbils, vice president of marketing at ASI, a Fremont, California-based Intel system builder. "As the industry moves in this direction, Intel not only makes sure the product portfolio is available but also provides information, guidance and strategic support to channel resellers which is why they continue to show strong support of Intel technologies. We don’t see any of that changing and we continue to see growth in these areas, particularly in server processors and platforms for the cloud."

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Analysts surveyed by Thomson Reuters expect Intel to earn 72 cents a share on revenues of $15.6 billion. The chip maker has beat expectations for the past four quarters.

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Intel made sweeping changes this year to focus more on the lucrative data center and Internet of Things markets, reducing its dependence on PCs.

In addition to cutting 12,000 jobs globally – about 11 percent of its workforce – over the past few months, Intel has made some critical executive changes as well. The company in September said it had appointed Bob Swan as the company’s new CFO to oversee Intel’s global finance and IT organizations, replacing Stacy Smith, who the company said in April will take a broader role in Intel to spearhead manufacturing, sales and operations.

Meanwhile, PC sales are declining worldwide. Market research firm IDC projects that PC shipments will be down 7.5 percent this year. That said, there are pockets of growth for higher-end PCs, so Intel is keen to find those opportunities. The company raised its third-quarter outlook in September, due in part to "some signs of improving PC demand" and replenishment of PC supply chain inventory.

Dominic Daninger, vice president of engineering at Nor-Tech, a Burnsville, Minnesota-based custom system builder with a large high-performance computing, or HPC, focus, said he saw strong PC sales over the summer, particularly education clients. "It'll be interesting to see what [Intel] says about desktop and PC: We had a strong summer this year," Daninger said. "I don’t have a sense how Intel fared. For the education sector, we're seeing more confidence in the economy in general, and the hardware out there is getting older and older, so more customers were looking for refreshes."

Daninger added that Intel has continued to push the envelope with over the past few months with new products for HPC. In June, Intel said it has started shipping its second-generation Xeon Phi processors, which aim to expand high-performance computing capabilities.

"We've seen a lot of activity from Intel, including new versions of Xeon Phi, which work directly with Omni-path and low latency fabric. There's a lot of stuff going on in HPC," he added. "We are also seeing things like Software Defined Infrastructure get talked about a lot more."

On the channel’s side, partners like Tibbils say that Intel is doing a good job supplying its partners with tools – including training, case studies and connections to other vendors – to excel in cloud services and the Internet of Things.

’Having a partner such as Intel that dedicates so many resources to the channel which is made up of small to mid-sized VARs, resellers and MSPs is essential to their success in this space.’

Intel reports its third-quarter earnings results on Tuesday after the market closes.