Apart from these acquisitions, Ericsson is also expanding its business in Estonia through the nationwide expansion of its LTE network. 95% of Estonia is geographically covered by Ericsson’s LTE network and over 30% of its mobile-broad band subscribers have already opted for Ericsson’s LTE plan which shows the success of this service in this area.
The competitor’s approach
Cisco Systems, Inc. (NASDAQ:CSCO) recently acquired JouleX, which deals in enterprise IT energy management for network-attached and data center assets. The acquisition complements Cisco Systems, Inc. (NASDAQ:CSCO)’s existing portfolio and its capabilities. It will help the company in providing simple ways to measure, monitor and manage energy usage for the network and IT systems in organizations. JouleX Energy Manager decreases energy costs up to 60%. The Kyoto Protocol calls for a reduction in carbon dioxide emissions in most of the developed nations. Therefore, organizations are now highly inclined towards getting these energy management solutions. This increasing trend will significantly boost Cisco Systems, Inc. (NASDAQ:CSCO)’s revenues after this acquisition.
Conclusion
Ericsson is finding new and better ways to attract customers and increase its revenues. Its growth in support solutions and TV industry is encouraging. The company’s profitability has improved by 26% YoY, which is driven by higher gross and operating margins. Its 3 year average revenue growth and net income growth is higher than the overall industry average.
The company is also trying to strengthen its market position in the LTE and TV industry. In Russia, the company has already secured two contracts from the largest operators there while its LTE network expansion plan in Estonia has also been very successful. With its latest acquisition of TeleOSS, it is expected that the company’s revenues from supporting system, the only segment in which the company is lagging behind, are also going to increase.
Therefore, it is anticipated that Ericsson’s profitability will continue to improve further due to the larger revenues and higher gross margins expected in the upcoming quarters. Its strategies will not only strengthen its relations with the customers but these moves will also make the investors happy. So, a buy recommendation is made for the stock.
Talking about Cisco Systems, Inc. (NASDAQ:CSCO)’s acquisition, the company has taken a wise step as nowadays there is an increasing trend towards fulfilling corporate social responsibilities. Every organization is trying to make customers happier by helping them meet these requirements. Moreover, the obligations imposed by Kyoto Protocol also bind the companies to fulfill these requirements. So, the acquisition of an energy management solution provider is definitely going to be beneficial for the company and the investors as well. So, I would make a buy recommendation for this stock too.
The article Promising Stocks in the Communication Equipment Industry originally appeared on Fool.com.
usman iftikhar has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems. usman is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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