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Nokia Stirs Telco Space With 5G-Backed Automated Operations

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Nokia Corporation (NOK - Free Report) recently unveiled an out-and-out AI-backed service offering that helps communication service providers (CSPs) to support future network evolution, and optimize enterprise and cloud services on a global scale. Dubbed Nokia AVA 5G Cognitive Operations, the innovative platform is expected to aid businesses and customers with reliable network connectivity. This is especially crucial at the moment when majority of CSPs are transitioning toward experience-driven and automated 5G network operations.

Notably, the company is focused on its strategy that entails four priorities. The first is to lead in high-performance end-to-end networks with its CSP customers. The second one is to expand network sales to select vertical markets, specifically energy, transportation, public sector, technical extra-large enterprises and webscale players. Building a strong standalone software business remains the third strategic priority. The fourth one intends to create new business and licensing opportunities in the consumer ecosystem.

Equipped with the best-in-class capabilities of data science, automation and machine learning techniques, the Finnish equipment maker’s latest offering leverages Microsoft Corporation’s (MSFT - Free Report) cloud computing service — Azure. Markedly, the multi-vendor software is a combination of Nokia’s high-end expertise on telecommunications-specific applications and Microsoft’s infrastructure-as-a-service (“IaaS”) and platform-as-a-service (“PaaS”) applications. This AI-as-a service platform has been specifically designed to accelerate the automation of network operations, thereby enabling operators to make prompt decisions about network slicing and data communication on a real-time basis.

Apart from identifying new revenue opportunities and supporting CSPs with 5G network slicing, the trailblazing AVA 5G Cognitive Operations software also enables operators to address service requirements and predict potential challenges accurately even before their occurrence. Impressively, the advanced 5G technology integrated in the software can detect probable network failures even up to seven days in advance. Intricately designed to enhance the overall network performance, the futuristic AI service offering can even solve various network challenges 50% faster than other non-sustainable traditional network operations. Anticipated to be available in second-quarter 2020, Nokia intends to deliver this one-of-a-kind solution to customers for periodic usage, rather than tagging it as a high-priced upfront solution.

The Finnish equipment vendor’s end-to-end portfolio includes products and services for every part of a network, which are helping operators to enable key 5G capabilities such as network slicing, distributed cloud and industrial IoT. It facilitates customers to move from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and automation. It is witnessing healthy underlying momentum in its focus areas of software and enterprise, which augurs well for its licensing business.

Currently, Nokia is expanding its business into targeted, high-growth and high-margin vertical markets to address several opportunities beyond its primary markets. It had previously announced plans to accelerate strategy execution, sharpen customer focus and reduce long-term costs. This, in turn, should help the company position itself as a global leader in the delivery of end-to-end 5G solutions. However, macroeconomic dynamics continue to take a toll on Nokia’s performance. Its Mobile Access business has been severely impacted by increased competition from arch-rivals, Ericsson (ERIC - Free Report) and Huawei, which is likely to create near-term pressure for the Finnish vendor.

Nokia’s shares have fallen 46.6% compared with the industry’s decline of 11.4% in the past year. The Zacks Rank #3 (Hold) stock topped earnings estimates twice in the trailing four quarters but missed the same in the remaining quarters. It has a trailing four-quarter positive earnings surprise of 87.5%, on average.



A Stock to Consider

A better-ranked stock in the industry is Qualcomm Incorporated (QCOM - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Qualcomm exceeded estimates in the trailing four quarters, the positive earnings surprise being 10%, on average.

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