Ericsson (ERIC) Rolls Out AT&T FlexWare Across The Globe

Ericsson (BS:ERICAs) (NASDAQ:ERIC) announced that it is making AT&T (NYSE:T) FlexWareSM available across its global corporate network, covering geographies like the U.S., Latin America, Middle East, and Europe.

AT&T FlexWare will be virtualizing Ericsson’s network services, thus allowing it to adapt its network to changing business needs on an almost real-time basis. AT&T FlexWare is modular, and hence easy to install. This makes the roll-out to multiple global sites quicker than traditional appliances, and will also lower Ericsson’s total cost of network ownership.

In addition, Ericsson is expanding the reach of its AT&T managed VPN.

After a bearish run for most part of last year, Ericsson’s shares gained some momentum since the beginning of 2017, having gained 13%, in stark contrast to the Zacks categorized Wireless Equipment industry’s decline of 0.1%.

In recent times, telecom equipment makers across the world have been distressed as customers invest less in 4G services, and even less in 3G, while waiting for the introduction of 5G networks. 2016 was a particularly harrowing year for Ericsson.

Even now, soft mobile broadband demand and slowdown in emerging markets are adversely affecting Ericsson’s performance. In fact, the company expects the industry trends and business mix in mobile broadband to prevail this year as well.

Ericsson Price and Consensus

The company’s CEO – Ekholm – has implemented a restructuring plan and is confident of “significant improvements” in the business next year, under stable market conditions. Ekholm’s restructuring plan will help streamline Ericsson’s focus areas, improve profitability and revitalize its technology and market leadership. The company also plans to explore options for the company’s media business and review “low-performing” contracts in its managed service business.

However, as of now, we have a Zacks Rank #5 (Strong 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.

Stocks to Consider

Some better-ranked stocks in the same space include Ubiquiti Networks, Inc. (NASDAQ:UBNT) , Sonus Networks, Inc. (NASDAQ:SONS) and Sierra Wireless, Inc. (NASDAQ:SWIR) , each holding a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ubiquiti Networks has a solid earnings surprise history for the trailing four quarters, having beaten estimates thrice, for an average beat of 13.3%.

Sonus Networks has a striking earnings surprise history for the trailing four quarters, beating estimates all through for an average positive surprise of 57.6%.

Sierra Wireless has beaten estimates impressively thrice over the trailing four quarters, with an average positive surprise of 155.9%.

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