Telecom service provider, EricssonERIC inked a content distribution services agreement with Net Insight for integrating the latter's Sye solution with its Unified Delivery Network ("UDN"). Ericsson's UDN offering is a content distribution service that assists low-latency, live content delivery.
Ericsson's UDN aids in partnership between content and service providers to create turnkey, value-added services by using infrastructure inside service provider networks, distributing content closer to end users resulting in advanced viewing experience. Net Insight's Sye solution harmonizes the viewing experience throughout live streaming events, enabling everyone to see the same content at the same time.
The co-developed solution will be able to improve efficiency of the global content distribution service. The collaboration will also result in resolving the latency and synching issues, allowing content and service providers to create an immersive live streaming experience.
Ericsson's UDN has already been deployed by a large number of content providers across the globe to improve network capabilities in the public domain, allowing services to be optimized and monetized in new ways. In July, Japan-based mobile phone operator, NTT DOCOMO, INC. selected Ericsson to deliver its UDN solution, which would enable DOCOMO users to access a diverse range of high-quality content.
Being one of the premier telecom services providers, Ericsson is in high demand among operators to expand network coverage and upgrade networks for higher speed and capacity. Notably, Ericsson is the world's largest supplier of LTE technology with a significant market share and has established a large number of LTE networks worldwide. Ericsson is poised to benefit significantly as operators continue to invest in telecom core networks for the deployment of new service offerings such as Voice over LTE among others.
Moreover, the company is also investing in R&D to increase competitiveness in Networks business. As a matter of fact, Ericsson is enthusiastic about the turnaround of the Chinese market in terms of 4G deployment and believes this will be a significant growth driver, going forward.
However, the company's stock has yielded a negative return of 12.9% over last six months, underperforming the industry 's average return of 2%. Investors have abandoned the stock as the company grapples with multiple financial troubles. Ericsson's repeated earnings misses, eroding profitability and precipitous revenue decline have left investors high and dry. Further, shrinking gross margins have been putting immense pressure on the bottom line.
The Zacks Rank #3 (Hold) company anticipates bleak 2017 results, and actually estimates that an uncertain market could wipe out nearly SEK 5 billion of operating income over the next year. Moreover, there is an increased risk of market and customer project adjustments, which can have a negative impact of SEK 3-5 billion on the operating income in the coming 12 months. These factors make us cautious of the stock for now.
Stocks to Consider
Some better-ranked stocks from the same industry are InterDigital, Inc. IDCC , Juniper Networks, Inc. JNPR and Sonus Networks, Inc. SONS . While InterDigital sports a Zacks Rank #1 (Strong Buy), Juniper Networks and Sonus Networks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
InterDigital has surpassed estimates in three of the trailing four quarters, with an average positive earnings surprise of 15.2%.
Juniper Networks has outpaced estimates in the preceding four quarters, with an average earnings surprise of 7.9%.
Sonus Networks has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 55.5%.
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