Ericsson ERIC recently announced that it has collaborated with ABB Ltd’s ABB power grid business to deploy avant-garde 5G technology in the factory floor as part of the latter’s digitization process. The Ludvika, Sweden-based power technologies giant has been a partner of Ericsson since last year. The current contract further extends its robust and secure network across business, research and factory connectivity. Markedly, ABB Power Grid is the first Sweden-based company to commercially capitalize on Ericsson’s 5G-ready Industry Connect ecosystem for a seamless industrial communications infrastructure.
Ericsson’s 5G-ready Industry Connect is a new-age solution that solves the connectivity requirements of smart factories or warehouses with reliable and ultra-low latency LTE technology. Specifically designed to enhance data security with in-built security protocols, it provides agility in operations and mobility for connected devices with an unparalleled level of device density. The innovative technology relies on advanced wireless connections and allows smart factories to integrate workflows in real-time, thereby enhancing manufacturing productivity and profitability to boost competitive advantage.
Notably, the collaboration is aimed at exploring the inter-networking aspect of 5G technology. Considered to be a key requirement for flexible automated production, the solution will enable network devices to operate in perfect unison across multiple factory sites.
As part of this collaboration, the Ludvika-based power grid will be leveraging essential tools such as handheld computers and cordless screwdrivers and 5G-ready dedicated cellular networks in its manufacturing facility to enable flexible as well as enhanced production quality. Moreover, the partners will perform remote monitoring of ABB’s business processes to accelerate the company’s digital transformation. Apart from ABB, companies like Telia and AFRY are also a part of this endeavor.
A few days ago, Ericsson reported tepid first-quarter 2020 results, as the COVID-19 pandemic had a limited impact on its operating income and cash flow. Although the company witnessed no material effect on the demand side so far, it expects the economic slowdown to compel some operators to delay their investment programs, thereby affecting its revenues. Nevertheless, the company stated that the business momentum has been strong for the new portfolio of 5G and cloud-native products. Important 5G core contracts were signed with several tier 1 operators in 2020. The Digital Services segment’s gross margin also improved to 39.9% from 36.8%, supported by a higher share of software sales and improved hardware margins.
Ericsson is on track with its 2020 and 2022 financial targets while progressing toward building a stronger company in the long term. It has invested in R&D and supply chain capacity to increase market share. The company resorts to a restructuring plan to cut costs and streamline focus areas as well as explore options for the media business.
Ericsson currently sports a Zacks Rank #1 (Strong Buy). It has a long-term earnings growth expectation of 17.7%. The stock has lost 16.6% compared with 17.7% decline of the industry in the past year.
Some other top-ranked stocks in the broader industry are Opera Limited OPRA and InterDigital, Inc. IDCC, both sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Opera’s bottom line surpassed the Zacks Consensus Estimate twice in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 192.9%, on average.
InterDigital’s bottom line surpassed the Zacks Consensus Estimate thrice in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 62%, on average.
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