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Ericsson to Power Sasktel's Next Generation IPTV Service

Ericsson ERIC has secured a contract to power SaskTel’s next generation IPTV service. The implementation of Ericsson’s MediaFirst solution suite will begin this year, with SaskTel planning to commercially launch its enhanced and expanded IPTV service in Saskatchewan in early 2018.

As the dominant information and communications technology provider in Saskatchewan, Canada, Ericsson MediaFirst will enable SaskTel to offer subscribers new features over a new Pay TV in-home and TV everywhere product. These features include a highly personalized interface across all screens, and will offer users the ability to watch live TV and access content on demand on any device. They will also be made available to the existing maxTV subscribers.

Under its end-to-end MediaFirst solution suite, Ericsson offers Ericsson MediaFirst TV Platform, Video Processing, Video Delivery and Video Storage and Processing Platform. Ericsson MediaFirst TV Platform is a “software-defined, media-optimized cloud-based TV platform.”

Over time, Ericsson has been taking strategic steps to fortify its foothold in the broadcasting and media industry, by extending its technology to broadcasters for merging video and mobility. In the past year, the company entered into multiple contracts — including Liberty Global’s operating unit, Liberty Global and Belgian telecommunication player, Proximus — to boost their Digital Video Recording services.

Ericsson further partnered with Alphabet Inc. GOOGL to extend the reach of its cloud-based MediaFirst TV Platform into the Android TV ecosystem, Google's operating system for the set-top box. The company has a proven track record, delivering TV and media business transformation for over two decades. Currently, it distributes four million hours of programming in more than 60 languages for over 500 TV channels.

Ericsson’s share price had a disastrous run on the bourse in 2016, as it plunged 39.3%, far wider than the Zacks Wireless Equipment industry’s average negative return of 7.7%. However, since then, the company has managed to recoup some of those losses, having appreciated 12.1% so far in 2017, in stark contrast to the industry’s average decline of 2.6%.

Earlier this week, Ericsson revealed a comprehensive restructuring plan to cut costs and streamline its focus areas, as well as explore options for the company’s media business.The company expects to take provisions, write-downs and restructuring charges this year, with most of them being booked in the first quarter. Ericsson also has plans to prune its TV/Media business to enhance profitability.

Whether these steps will allow Ericsson to jump back on the growth track, remains to be seen. However, as of now, we have a Zacks Rank #4 (Sell) on the stock, as we are apprehensive over the impact of the restructuring on the company’s profits and share price in the near term.

The stock has also attracted some negative analyst attention, of late. Over the past month, analysts have become somewhat bearish on the stock, with estimates moving south. With one downward revisions compared with none upward in the past 30 days, the Zacks Consensus Estimate for fiscal 2017 has declined 3.3% to 29 cents.

Ericsson Price and Consensus

Ericsson Price and Consensus | Ericsson Quote

Stocks to Consider

Some better-ranked stocks in the same space includeMotorola Solutions, Inc. MSI and Ubiquiti Networks, Inc. UBNT, both holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Motorola has a striking earnings surprise history for the trailing four quarters, having beaten estimates all through, for an impressive average beat of 16.4%.

Ubiquiti Networks has managed to beat earnings estimates thrice over the trailing four quarters. It has an average positive surprise of 14.3%.

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