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Ericsson Inks Deal to Fortify Content Discovery Business


Ericsson ERIC recently inked a content discovery services agreement with DNA Oyj (“DNA”), in an effort to strengthen its content discovery business in the Nordic region.

Content discovery stands first in the priority list of current operators, broadcasters and content owners. However, the same is still regarded as a major challenge for contemporary viewers. In this stance, premium quality metadata offered by Ericsson aids in promoting diversified types of content. Notably, the company’s metadata helps in bringing users into pay-television content domain.

DNA is a prominent telecommunications and pay-television operator in Finland. Per the aforementioned deal, Ericsson will offer editorial services and rich metadata for more than 150 television channels from the Finnish digital-terrestrial and DNA cable networks. Notably, similar services will be offered over broadband. Moreover, Ericsson’s metadata will offer content discovery services on DNA’s television — hubi.

The above discussed deal fortifies Ericsson’s position as the leading media and broadcast service provider in the industry, going forward.

Our Take

This Zacks Rank #3 (Hold) company has prioritized three areas of growth — core business, targeted investments and cost & efficiency. In addition, strategic restructuring moves and the partnership deal signed with Cisco Systems, Inc. CSCO this January are anticipated to boost results in the quarters ahead.

However, the company estimates that an uncertain market could wipe out nearly SEK 5 billion of operating income over the next year. Escalating restructuring expenses and spectrum crunch may pose as significant headwinds in the near future. Though narrower than the industry loss of 6.5%, Ericsson’s shares lost 1.7% on a year-to-date basis.

Stocks to Consider

Better-ranked stocks in the industry are listed below:

InterDigital, Inc. IDCC has an average positive earnings surprise of 15.17% over the last four quarters and currently carries a Zacks Rank #2 (Buy). Over the last 60 days, the Zacks Consensus Estimate for the stock moved north for both 2017 and 2018. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Motorola Solutions, Inc. MSI, which currently carries a Zacks Rank #2, pulled off an average positive earnings surprise of 14.45% over the trailing four quarters. The Zacks Consensus Estimate for the stock has moved upward for both 2017 and 2018 in the past 60 days.

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