Ericsson, Dialog Axiata Roll Out Massive IoT in Sri Lanka

EricssonERIC has partnered with Dialog Axiata PLC - Sri Lanka's largest telecommunications services provider - to launch the first commercial Massive IoT network in Southeast Asia that supports both Cat-M1 (Category M1) and NB-IoT (Narrow Band IoT) technologies.

Ericsson is offering Cat-M1 (LTE-M) and NB-IoT support as a software activation to Dialog Axiata's existing LTE Radio Access Network.

The advanced mobile network technology, which will be deployed across Dialog Axiata's Sri Lankan network, will accelerate the proliferation of IoT devices. Further, features like long battery life, superior coverage and cost-effective enterprise solutions will help develop the country's IoT ecosystem.

Cat M1 and NB-IoT technologies are becoming increasingly popular, owing to the fact that these optimize devices to send data while utilizing battery life to the maximum. Ericsson's Massive IoT solutions for Cat-M1 and NB-IoT devices offer immense advantages such as low cost, massive connections, deep coverage, low power consumption as well as more secure and reliable transmission.

The technologies are driving the IoT revolution on the technical side of things, which is not surprising considering the advantages they offer. The Cat-M1/NB-IoT network will multiply opportunities for solutions like Smart Metering for utilities, Smart Parking, smart environmental sensors for smart cities, logistic solutions and other applications in agriculture and farming.

In spite of solid offerings, Ericsson is witnessing negative industry trends and adverse business mix in mobile broadband. Particularly, uncertainty in the financial markets, reduced consumer telecom spending and delayed auctions of spectrums pose significant threats for Ericsson. Operators have been cautious in making new investments, especially in the emerging markets, which has affected the company's revenues and profits. Further, Europe and Latin America - the markets with the biggest impact - are expected to have an increasingly challenging investment environment.

Ericsson Price, Consensus and EPS Surprise

Ericsson Price, Consensus and EPS Surprise | Ericsson Quote

As far as earnings performance is concerned, Ericsson has had a dismal earnings surprise history over the trailing four quarters, missing estimates terribly all through. The company has lagged estimates by a whopping 552.5% on an average.

Ericsson's earnings estimates have moved south in the past couple of months, indicating bearish analyst sentiment for the stock. The Zacks Consensus Estimate for 2018 earnings has been revised downward from 17 cents to 3 cents over the past 60 days, driven by three downward estimate revisions versus just one upward.

Over the past year, the company's shares have returned 2.1%, significantly underperforming the industry 's gain of 16.7%.

Nevertheless, Ericsson expects to stabilize its operations amid a difficult market in 2018. Ekholm's restructuring plan will help streamline the company's focus areas, improve profitability and revitalize its technology and market leadership.

Whether these steps will allow Ericsson to get back on the growth track, remains to be seen. Right now, we are apprehensive over the impact of the restructuring and tough market conditions on the company's profits and share price in the near term.

We have a Zacks Rank #3 (Hold) on the stock, at present. Investors who are looking for exposure to the upcoming 5G upgrade cycle or IoT might look at players like Nokia Corporation NOK and Cisco Systems, Inc. CSCO .

Stock to Consider

A better-ranked stock in the same space is Harris Corporation HRS , holding a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Harris Corporation has a decent earnings surprise history, with an average positive surprise of 6.7%, driven by three earnings beats over the trailing four quarters.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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