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Ericsson & SoftBank to Initiate Advanced 5G 28GHz Trials

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Telefonaktiebolaget LM Ericsson (publ) (ERIC - Free Report) and SoftBank Corp. (a subsidiary of SoftBank Group Corp.) are taking their 5G trial another step ahead, with more advanced tests.

The trial started in August last year, and included base stations and user equipment with control signal feedback using mid-band spectrum at 4.5 GHz. The companies have successfully completed 4.5GHz and 15GHz spectrum on basic 5G trials in Tokyo. In fact, 4.5GHz is emerging as the leading candidate band for 5G services in Japan, together with 28GHz. 

The advanced tests will call for 5G trials to be conducted in indoor and outdoor trial environments, covering both device mobility and stationary tests. Ericsson's mmWave 28GHz 5G Test Bed solution will be used in the trial, which includes base stations and device prototypes.

The companies are planning to showcase advanced 5G technologies, including Massive-MIMO, Massive Beamforming, Distributed MIMO, Multi-user MIMO and Beam Tracking. This will include multi-gigabit data rates and ultra-low latency, which are evolving as key requirements for future consumer mobile broadband and industrial use-cases.

5G marks a revolution in the field of communications and technology, and is the next key phase of mobile telecommunications standards.

Touted as the next generation of mobile technology, 5G has achieved rapid momentum over the past year. 5G networks have the capability to radically lessen latency, accelerate download and upload speeds, enhance network reliability and spectral efficiency. Also, they have the potential to support IoT development by considerably escalating the number of devices that can connect to the network simultaneously.

According to a research by Ovum, global 5G subscriptions are projected to reach 24 million by 2021, with the Asia-Pacific region having a 40% share and Europe accounting for 10%. Ericsson continues to aggressively drive progress in 5G technology and is engaged in multiple trial engagements with different operators across the world.

Just last month, Ericsson collaborated with technology behemoth, Intel Corporation (INTC - Free Report) , to launch an open industry platform – 5G Innovators Initiative (5GI2) – to create transformative experiences for clients. 5GI2 will facilitate the introduction of IoT solutions for a gamut of industries, ranging from aircraft and industrial plants to manufacturers and retailers.

Ericsson’s share price had a disastrous run on the bourse in 2016, as it plunged 39.3%, far wider than the Zacks classified Wireless Equipment industry’s average decline of 7.7%. However, since then, the company has managed to recoup some of those losses. 2017 has been a good year for Ericsson so far, as the stock has appreciated 12.3% year to date, in stark contrast to the industry’s average decline of 2.9%

However, the stock has attracted some negative analyst attention of late. Over the past couple of months, analysts have become somewhat bearish on the stock, with estimates moving south. With two downward revisions compared with none upward in the past two months, the Zacks Consensus Estimate for fiscal 2017 earnings declined from 32 cents to 29 cents.

Ericsson Price and Consensus

Owing to these mixed indicators, we have a Zacks Rank #3 (Hold) on Ericsson, which indicates expectations of in-line performance from the company in the near term.

Stocks to Consider

Some better-ranked stocks in the same space include Motorola Solutions, Inc. (MSI - Free Report) and Ubiquiti Networks, Inc. . Both the stocks hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Motorola has a striking earnings surprise history for the trailing four quarters, having beaten estimates all through, for an impressive average beat of 16.4%.

Ubiquiti Networks has managed to beat earnings estimates thrice over the trailing four quarters. It has an average positive surprise of 14.3%.

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