InterDigital, Inc. (IDCC - Free Report) recently disclosed details of a demonstration, where the company applied a service-based architecture (SBA) to a 5G control plane. The demonstration, held on Apr 17 and 18, showed how network control functions can be created and run in a cloud-based environment using standard server infrastructure. This is likely to improve scalability, velocity and flexibility in creating virtual control plane services apart from reducing costs.
The company also displayed its solution for 3GPP’s common communication enabler (COEN) at this recent Next Generation Mobile Networks (NGMN) event in Paris. The demonstration highlighted how the communication model of today’s web services can be utilized by a 5G control plane to create multiple software instances in a cloud environment. Notably, the company’s SBAsolutionhelps in achieving registration of new service instances in less than 20ms, thereby enabling high speed delivery of IP-based services.
This apart, InterDigital’s patent holding subsidiaries entered into a worldwide, royalty bearing patent license agreement with Fujitsu Connected Technologies Limited. This multi-year deal involves the sale of Fujitsu Connected Technologies’ 2G, 3G and 4G terminal unit products that include LTE and LTE-Advanced products.
Existing Business Scenario
InterDigital’s commitment toward licensing its broad portfolio of technologies to wireless terminal equipment makers is impressive. This, in turn, allows the company to expand its core market capability. Currently, InterDigital has several leading companies under its licensing agreement. Also, the company expects to grow the licensing revenue base by adding a number of other companies under its licensees, which have attained market prominence over the past several years.
In the past six months, the Zacks Rank #3 (Hold) company has outperformed the industry it belongs to. The stock has returned 3.1% against the industry’s 2.7% decline.
Moreover, the company’s global footprint, diversified product portfolio and the ability to penetrate in different markets are commendable. Apart from the company’s strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings is likely to drive considerable value, considering the massive size of the market it licenses.
Meanwhile, InterDigital’s is focusing on strategic acquisitions to strengthen its product portfolio. In this regard, the company’s plan to acquire the patent licensing business of Technicolor is expected to provide it with an enhanced portfolio of video technologies besides opening up new opportunities in the consumer electronics market.
However, the company’s high investment in R&D projects is likely to affect its profitability in the coming quarters. This apart, the decline in return on capital despite rise in the company’s capital spending and capitalized patent costs remains a concern for the company.
Some better-ranked stocks from the same space are Comtech Telecommunications Corp. (CMTL - Free Report) , Juniper Networks, Inc. (JNPR - Free Report) and Ubiquiti Networks, Inc. (UBNT - Free Report) . While Comtech Telecommunications sports a Zacks Rank #1 (Strong Buy), Juniper Networks and Ubiquiti Networks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comtech Telecommunications exceeded estimates in the preceding four quarters, with an average positive earnings surprise of 123.70%.
Juniper Networks surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 3.35%.
Ubiquiti Networks outpaced estimates thrice in the preceding four quarters, with an average earnings surprise of 8.88%.
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