NSN Rebuffs ALU Buyout Talks

Zacks

Recently, Nokia Solutions and Networks (:NSN), a division of Nokia Corp. (NOK), denied a long going rumor in the industry that the company will acquire its rival Alcatel-Lucent S.A. (ALU). NSN stated that the company has no such immediate plans since its own business is rapidly improving.

Nokia has decided to divest its core mobile handset and its services division to Microsoft Corp. (MSFT). The deal is expected to be close in the first quarter of 2014. Post the divestiture, NSN will become the company’s chief business division.

Nokia Solutions and Networks has strong technical efficiencies in professional managed services, customer experience management together with a rich portfolio of mobile broadband infrastructure and 4G LTE networks.

We believe that the improvement was mainly spurred by encouraging financial gains from the lucrative North American region, which has been the weakest sector of the company so far. Nokia’s acquisition of 3G/4G CDMA network gear businesses of Motorola Solutions strengthened its foothold in North America.

Recently, NSN received a major contract from Sprint Corp. (S) for assisting the latter’s upcoming LTE network project. Sprint is the third largest telecom operator in the U.S. NSN is facing less competitive threat in the U.S. since major low-cost Chinese network gear makers, such as Huawei and ZTE, have been barred from operating due to concerns over national security, as these companies have close proximity with the Chinese government.

Moreover, Nokia Solutions and Networks entered into a deal with content delivery network operator CDNetworks to accelerate the delivery of mobile content. Liquid technology is a software solution for network infrastructure that drastically reduces the need for dedicated hardware.

The company stated that its new Liquid Applications will change the competitive landscape of the telecom infrastructure gear market by revolutionizing base stations. Nokia currently has a Zacks Rank #3 (Hold).

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