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Cisco & Telenor Launch WorkingGroupTwo for Mobile Operators

Zacks

Cisco Systems, Inc. CSCO recently announced that it has collaborated with Telenor, a telecommunications company, to form “WorkingGroupTwo” (WG2). It will be providing a cloud solutions platform meant for assisting telecom operators in accelerating product innovation and speedy marketing of products.

WG2, will have 95% of its shares equally owned by Telenor and Cisco’s financial partner Digital Alpha. The board members and other employees of the company will have the ownership of the remaining 5% shares. Erlend Prestgard will be taking up the role of the company’s chief executive officer.

The platform will enable mobile operators to launch innovative services faster across different enterprise level platforms, thereby positively impacting the top line of the operators. We believe the collaboration will be beneficial for Cisco and is anticipated to boost its performance going forward.

Shares of Cisco have gained 14.6% year to date, outperforming the industry’s13.7% rally.


Cisco’s Business Trends

We believe Cisco is well combating the headwinds related to weakness in the switching, routing and data center businesses by expanding in the growing security market.

The company’s recent acquisition of “Observable Networks”, a provider of cloud-native network forensics security applications delivered as a service, is expected to enrich the capabilities of the company’s Stealthwatch Solution into the cloud. This in turn will enable Cisco to better comply with the applications deployed in Amazon’s AMZN Web Services and Microsoft’s MSFT Azure cloud platforms.

Moreover, the advancements of the company in the field of hyperconvergence technology is another tailwind. The company’s recent launch of Intersight aimed at simplifying data center operations and the acquisition of Springpath are testaments to the fact.

Further, Cisco’s extended partnerships with Apple AAPL, IBM and Microsoft will help it to gain significant traction in the cloud and Internet of Things (IoT) market in the long run. Additionally, the launch of Application Centric Infrastructure (ACI) and the acquisition of Viptela indicate the company’s initiatives to address the threats related to software defined network (SDN).

However, the ongoing transition to subscription-based model will continue to hurt the company’s top line for some time now. The weakness in the service provider business segment and intense competition from the likes of Huawei, Juniper and Arista Networks are other major concerns for the time being.

Zacks Rank

Cisco currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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