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Ericsson's (ERIC) Cradlepoint Buys Ericom to Boost SASE Bouquet

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Ericsson (ERIC - Free Report) subsidiary Cradlepoint recently acquired Ericom Software and its enterprise cloud security platform for an undisclosed amount. The buyout is likely to augment Cradlepoint’s Secure Access Service Edge (SASE) framework and zero trust offerings for hybrid 5G and wireline environments.

SASE is a security framework that converges software-defined wide area networking (SD-WAN) and zero trust security solutions into a converged cloud-delivered platform that securely connects users, systems, endpoints and remote networks to apps and resources. This is expected to facilitate the development of the new Cradlepoint NetCloud Threat Defense cloud service, which will expand its mobile-capable and router-integrated SASE and zero trust portfolio for fixed-site, remote worker, in-vehicle and IoT use cases.

The acquisition will leverage Cradlepoint’s enterprise networking expertise and Ericom’s innovative SSE and zero trust security solutions to help address the growing cybersecurity needs of global enterprises as they accelerate the rapid adoption of 5G technologies. The transaction will enable the delivery of a comprehensive SD-WAN and SASE solution for Wireless WAN and private cellular networking for cloud-based secure network solutions. This, in turn, will strengthen Ericsson’s market position as a leading mobile infrastructure provider and establish a focused enterprise business.

Ericsson is the world’s largest supplier of LTE technology with a significant market share and has established a large number of LTE networks worldwide. With the emergence of the smartphone market and subsequent usage of mobile broadband, user demand for coverage speed and quality has recently increased manifold. Further, to maintain superior performance as traffic increases, there is also a continuous need for network tuning and optimization. Ericsson is much in demand among operators to expand network coverage and upgrade networks for higher speed and capacity.

The company is focusing on 5G system development. It believes that the standardization of 5G is the cornerstone for digitizing industries and broadband. The deployment of 5G networks is expected to boost the adoption of IoT devices, with technologies like network slicing gaining more prominence. Ericsson currently has 145 live 5G networks across the globe spanning 63 countries.

The stock has lost 38.3% over the past year compared with the industry’s decline of 10.8%.

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Ericsson currently has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Picks

Arista Networks, Inc. (ANET - Free Report) , sporting a Zacks Rank #1, is likely to benefit from the strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 14.2% and delivered an earnings surprise of 14.2%, on average, in the trailing four quarters.

It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.

Juniper Networks, Inc. (JNPR - Free Report) carries a Zacks Rank #2 (Buy). It has a long-term earnings growth expectation of 7% and delivered an earnings surprise of 1.6%, on average, in the trailing four quarters.

Juniper is leveraging the 400-gig cycle to capture hyperscale switching opportunities inside the data center. The company is set to capitalize on the increasing demand for data center virtualization, cloud computing and mobile traffic packet/optical convergence.

Nokia Corporation (NOK - Free Report) , carrying a Zacks Rank #2, is another key pick. By unlocking network efficiencies with a software upgrade, Nokia has reduced the total cost of ownership for mobile operators. The company is well-positioned for the ongoing technology cycle, given the strength of its end-to-end portfolio.    

It has a long-term earnings growth expectation of 1.8% and delivered an earnings surprise of 9.7%, on average, in the trailing four quarters. Nokia is witnessing healthy momentum in its focus areas of software and enterprise, which augurs well for the licensing business. It is poised to benefit from copper and fiber deployments of passive optical networking.

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