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Nokia's Oulu Factory Selected as Advanced 4IR Lighthouse

Zacks Equity Research

Nokia Corporation NOK recently announced that its Oulu factory has been chosen as an Advanced 4th Industrial Revolution (4IR) Lighthouse by McKinsey and the World Economic Forum. Notably, the Oulo factory uses Industry 4.0 concepts for 5G and 4G base station manufacturing.

Managed by the World Economic Forumin cooperation with McKinsey, the Lighthouse program’s objective is to select factories that work on enhancing their operational performance. Notably, the selection of Nokia as a Lighthouse was based on the company’s successful implementation of 4IR technologies in the Oulu factory, which led to significant financial and operational improvements.

The company’s 5G "factory of the future" in Oulu, which produces 1,000 4G and 5G base stations on a daily basis, employs its own private 4.9/LTE network, IoT analytics on Edge Cloud and other technologies. The digitization of the pre-production facility with its own advanced technologies has enabled the company to generate substantial annual improvements that include 50% savings in time of product delivery, more than 30% productivity improvements, apart from cost savings of millions of euros. Notably, the use cases showcased in Oulu factory include flexible robotics, virtualization of new product introduction and cloud-based digital data control and no-touch internal logistics automation, among others.

Existing Business Scenario

The Finnish telecom equipment provider is well positioned for the ongoing technology cycle given the strength in its end-to-end portfolio. The company’s deal win rate is encouraging with notable successes in the key 5G markets of the United States and China. Its installed base of high-capacity AirScale product, which enables customers to quickly upgrade to 5G, is growing fast.

The company seeks to expand its business into targeted, high-growth and high-margin vertical markets to address growth opportunities beyond its traditional primary markets. Rollouts of next-generation 5G networks are expected to improve market conditions significantly in 2019 and beyond.

In the past month, this Zacks Rank #3 (Hold) company has returned 1.4% against the industry’s decline of 3.8%.

However, the company has considerable operations in geographies outside the United States. Its significant international presence exposes it to political and economic disruptions, all of which can directly affect profits.

Key Picks

Some better-ranked stocks from the same space are Ubiquiti Networks, Inc. UBNT, Comtech Telecommunications Corp. CMTL and PCTEL, Inc. PCTI. Al these companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ubiquiti Networks exceeded estimates in each of the preceding four quarters, the average positive earnings surprise being 22.31%.

Comtech Telecommunications outpaced estimates in each of the preceding four quarters, the average being 216.67%.

PCTEL surpassed estimates twice in the trailing four quarters, the average being 100.00%.

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