Ericsson ERIC said that its spectrum sharing solution is currently available to communication service providers (CSPs) so that they can launch nationwide 5G in a cost-effective way. Within the next 12 months, more than 80% of Ericsson-powered commercial 5G networks will likely use this solution to achieve broad 5G coverage.
The Swedish telecom gear maker’s spectrum sharing enables both 4G and 5G to be deployed in the same band and on the same radio through a software upgrade. Ericsson believes that its dynamic solution is the most economically feasible way to deploy 5G on existing bands. Ericsson Spectrum Sharing (ESS) software can run on any of its five million 5G-ready radios delivered since 2015.
At the end of 2019, Ericsson had 78 commercial 5G agreements with communication service providers, 32 announced 5G contracts and 24 live 5G networks on four continents. ESS will expand 5G coverage for global service providers including Swisscom, Telstra, Ooredoo and Play. Ericsson has been collaborating with chipset partners including Qualcomm Technologies on advancing dynamic spectrum sharing using mobile devices. With ESS, service providers can quickly rollout 5G on their Frequency Division Duplex bands without further investment.
Ericsson is witnessing healthy momentum in its business on the back of the strategy to increase investments for technology leadership, including 5G. In Networks, the company’s ongoing activities are to invest in R&D to safeguard a leading product portfolio and cost leadership; increase investments in automation and serviceability driving down costs; and selectively gain market shares based on technology and cost competitiveness.
Ericsson is on track with its 2020 and 2022 financial targets while making progress toward building a stronger company in the long term. It has invested in R&D and supply chain capacity in order to increase market share. The acquired Kathrein business is expected to have a negative impact on Networks’ margins during 2020, with a gradual improvement in the second half. The improvement in Digital Services is likely to continue but earnings will vary between quarters depending on business mix and sales seasonality.
In fourth-quarter 2019, Ericsson’s net sales at Networks increased 6.7% year over year to SEK 44.4 billion. The rise was driven by investments in LTE and 5G networks with strong growth particularly in Japan and Saudi Arabia. The segment’s gross margin grew to 41.1% year over year from 39.9%. Operating margin declined to 14.4% from 16.5% due to higher operating expenses owing to increased investments in R&D for 5G and in projects for digital transformation, compliance and security.
Thanks to investments in R&D combined with operational efficiency, shares of Ericsson have gained 8.9% against 0.2% decline recorded by the industry in the past six months.
Ericsson currently has a Zacks Rank #3 (Hold).
A few better-ranked stocks in the industry include Motorola Solutions, Inc. MSI, Qualcomm Incorporated QCOM and PCTEL, Inc. PCTI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Motorola has trailing four-quarter positive earnings surprise of 6.6%, on average.
Qualcomm has trailing four-quarter positive earnings surprise of 10%, on average.
PCTEL has trailing four-quarter positive earnings surprise of 150.6%, on average.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
Ericsson (ERIC) : Free Stock Analysis Report
Motorola Solutions, Inc. (MSI) : Free Stock Analysis Report
PCTEL, Inc. (PCTI) : Free Stock Analysis Report
To read this article on Zacks.com click here.