Nokia Corporation’s NOK wholly-owned subsidiary, Nokia Solutions and Networks (“NSN”), has decided to acquire U.S.-based Eden Rock Communications. However, the financial terms of the transactions have been kept under wraps.
The acquisition of Eden Rock Communications, a multivendor self-organizing network (“SON”) will certainly boost Nokia’s network performance during peak hours. The Eden-NET technology has gained significant traction and is widely used in GSM, UMTS and LTE networks. Hence, integration of the newly-acquired technology into NSN’s portfolio will enhance the network reliability and operational efficiency of the company to a large extent.
As per the acquisition process, Eden Rock will spin-off into a new company retaining its spectrum sharing tools, technology and patents.
In first-quarter 2015, the NSN segment generated nearly $3 billion of revenues, up 15% year over year. Strong sales in the North American market boosted the upside. Continuous order wins coupled with the new acquisition deal will further boost the top line for the company.
Meanwhile, Nokia has completed the sale of its core mobile handset and services division to Microsoft Corp. MSFT. Post the divestiture, NSN has become the company’s chief business division and accounts for approximately 90% of the total revenue.
In a separate development, Nokia Networks took its decision to merge with Alcatel-Lucent ALK. The merger will be a win-win prospect for both the companies, as the newly-formed entity will benefit from the advanced attributes of both the network solution providers. Also, the board of directors of both the companies has accepted the terms of the deal, which is anticipated to close in the first half of 2016.
Nokia currently carries a Zacks Rank #3 (Hold). Another stock worth considering in the same sector include Juniper Networks, Inc. JNPR which sports a Zacks Rank #1 (Strong Buy).
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