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Nokia’s In-Flight Wi-Fi Technology to be Acquired by Google


According to a Bloomberg report, airborne broadband system of wireless services provider, Nokia Corporation NOK is likely to be acquired by technology behemoth Alphabet Inc. GOOGL. Although both the company spokespersons have refused to comment on the issue or divulge any details, multiple sources have confirmed that negotiations are currently at a nascent stage.

Nokia offers air-to-ground connectivity network with Internet speed comparable to that provided by its rivals like Gogo Inc. GOGO. By acquiring Nokia’s in-flight technology, Alphabet is likely to drive more customers to a faster alternative to facilitate the use of its other entertainment products like YouTube or Play Music.

By divesting in-flight Internet technology, it is likely to focus more on its 5G telecom equipment business. Rollouts of next-generation 5G networks are anticipated to improve market conditions significantly in 2019 and 2020. Nokia’s Networks division is also expected to grow faster than the primary addressable market over the long term.

The company’s dynamic and programmable optical network, which can support virtualization and cloud technologies associated with 5G, is expected to give a competitive edge to diverse firms across the globe to drive business growth. Moving forward, Nokia will help in the transition of global enterprises into smart virtual networks by creating a single network for all services, converging mobile and fixed broadband, IP routing and optical networks with software and services to manage them.

Leveraging state-of-the-art technology, Nokia is transforming the way people and things communicate and connect with each other. These include seamless transition to 5G technology, ultra broadband access, IP and Software Defined Networking, cloud applications, Internet of Things, as well as security platforms, data analytics and sensors.

In order to strengthen its leading position in the market, Nokia facilitates its customers to move away from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and flexible automation needed to support dynamic operations, reduce complexity and improve efficiency. Consequently, customers can fulfill end-user demands by provisioning services in real time while automatically making optimal use of networks assets. The company is also continuously expanding its business into targeted, high-growth and high-margin vertical markets to address growth opportunities beyond its traditional primary markets.

With a diligent execution of operational plans, Nokia has outperformed the industry with an average return of 13.4% in the last three months against a decline of 6.6% for the latter.

Nokia carries a Zacks Rank #3 (Hold). A better-ranked stock in the industry worth considering is Comtech Telecommunications Corp. CMTL, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Comtech has a long-term earnings growth expectation of 5%. It surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 111.4%.

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