Ericsson (ERIC) recently closed the acquisition of Microsoft Corp’s (MSFT) Mediaroom business and became the leading provider of IPTV (Internet Protocol TV) and multi-screen solutions. Ericsson plans to include Mediaroom into its Business Unit Support Solutions. The decision to acquire the business was announced on Apr 8, 2013.
Located at Mountain View, CA, Mediaroom is a leading comprehensive platform for video distribution comprising the world's largest IPTV operators. Its services are offered on various devices including WiFi set top boxes, Xbox 360, personal computers, tablets and smartphones.
The acquisition of the TV business comes at an opportune time when the global IPTV market is expected to cater to 76 million subscribers in 2013. Further, the IPTV market is expected to generate revenues of $32 billion. Ericsson expects the IPTV market to have 105 million subscribers with revenues of $45 billion by 2015.
The acquisition is a strategic move by Ericsson as it expects television customers’ demand to grow rapidly, thanks to the swift technological innovations. Further, the company believes that this development will continue to drive the industry.
Furthermore, ABI Research firm stated that IPTV market share registered 11.5% growth in 2012 as compared with 10% in fiscal 2011. Therefore, it is believed that IPTV will be the next big thing for the telecom companies. So, investing in the initial phase is expected to give good results going forward.
Ericsson currently has a Zacks #3 (Neutral). Other wireless equipment stocks worth a look are Ubiquiti Networks Inc. (UBNT) and Tellabs Inc. (TLAB). Ubiquiti Networks has a Zacks Rank #1 (Strong Buy), while Tellabs Inc. carries a Zacks Rank #2 (Buy).
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