InterDigital's Ally Wins MmWave Tactical Communications Deal

InterDigital, Inc. (NASDAQ:IDCC) recently revealed that Shared Spectrum Company (“SSC”) has clinched a U.S. Army Small Business Innovation Research contract from the U.S. Department of Defense. SSC was awarded the deal to augment the army tactical communications infrastructure by leveraging the millimeter wave (mmW) technology.

SSC is a leading developer of spectrum-sensing cognitive radio technology that permits devices to dynamically and automatically seek out and utilize high frequencies and bandwidth anytime, anywhere. It uses avant-garde equipment for rapid prototyping and precision field testing of products and services and market the same to various U.S. government agencies and private sector companies.

Being a partner of InterDigital, SSC has been entrusted with the responsibility of developing cost-effective communications infrastructure, which will be conducive in Anti-Access and Area Denial environments. The mmW communications is considered as a primary driver in 5G and fixed service wireless backhaul in the 28 and 70 GHz regions, resulting in high-throughput data capacity. The project aims to identify mmW’s capacity to operate in congested environments by examining improvements in modulation and signal processing techniques, and capitalizing on Low-Probability-of-Intercept/Low-Probability-of-Detection and anti-jamming capabilities. Peer-to-peer mmWave networks, data centers in Internet and cloud-based communications and vehicle-to-vehicle communications are some of the evolving areas in which mmWave communications are utilized in the commercial sector.

The project, which is expected to unleash the potential of mmWave technology in wireless communications, will be rolled out in three phases and is expected to end in 2022.

InterDigital’s commitment toward licensing its comprehensive portfolio of technologies to wireless terminal equipment makers is noteworthy. The company has several leading companies under its licensing agreement. It also anticipates to grow the licensing revenue base by adding a number of other companies under its licensees, which have attained market prominence over the past several years.

The company’s global footprint and ability to penetrate in different markets are praiseworthy. Currently, it operates nine R&D facilities in five countries. Apart from its strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings is likely to drive significant value, considering the massive size of the market it licenses.

InterDigital has long-term earnings growth expectation of 15%. It remains committed to its objective of expanding revenue streams while controlling operating expenses.

Shares of InterDigital have added 1.8% compared with the industry’s growth of 4.9% in the past three months.

The Zacks Consensus Estimate for its current-year earnings has been revised 34.4% upward over the past 90 days. The company surpassed earnings estimates thrice in the trailing four quarters, delivering an average beat of 52.5%.

Zacks Rank & Stocks to Consider

InterDigital currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the industry are Qualcomm Incorporated (NASDAQ:QCOM) , Ubiquiti Inc. (NASDAQ:UI) and PCTEL, Inc. (NASDAQ:PCTI) . While Qualcomm and Ubiquiti sport a Zacks Rank #1 (Strong Buy), PCTEL carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Qualcomm surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 8.7%.

Ubiquiti outpaced estimates thrice in the preceding four quarters, the average positive earnings surprise being 16.1%.

PCTEL exceeded estimates in each of the trailing four quarters, the average positive earnings surprise being 150.6%.

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