Nokia Siemens Network (NSN), a 50-50 joint venture between Nokia Corp. (NOK) and Siemens AG (SI), has recently won a contract from Shaw Communications Inc. (SJR) to supply radio access network and infrastructure equipments for Shaw Communications next-generation wireless network. The financial terms of this contract are not disclosed.
Shaw Communications decided to launch wireless services in late 2011. In order to build up this network, management plans to invest around $100 million in the second half of fiscal 2010 and little over $100 million in each of the following few years.
NSN will supply fully 3G and 4G super-fast LTE enabled network infrastructure to Shaw Communications. Using the Advanced Wireless Services band, this next-generation high-speed wireless network will enable Shaw to offer innovative mobile broadband services to its customers.
After a pathetic 2009, we identify a ray of hope for NSN. The company is the second largest telecom infrastructure developer of the world with 21% market share. However, it is facing severe competitive pressure from the Chinese giant Huawei Technologies Co. Ltd. Of late, management has taken several steps to improve its financials. The company is now giving more competitive bid prices for any contract. This strategy helps the company secure several contracts which include some big names like Shaw Communications, TeliaSonera AB , and NTT DoCoMo (DCM).
Industry sources estimates that the number of LTE subscribers will grow from 100,000 in 2010 to 380 million in 2015. NSN expects to accelerate growth in 2010. Management estimated second quarter 2010 revenue to be in the range of $4.2 billion – $4.58 billion. Operating margin in fiscal 2010 is likely to be 0% – 2% compared with massive operating loss of around $2.43 billion (including $1.35 billion of goodwill impairment) in 2009.
Furthermore, NSN has decided to cut 5,760 jobs as part of a major restructuring program. This will help the company reduce operating expenditures by around $732 million by the end of 2011.
We maintain our Underperform recommendation for Nokia. It is currently a Zacks Rank #5 (Strong Sell) stock. For Siemens, our current recommendation is Neutral supported by Zacks Rank #3 (Hold).
Shaw Communications decided to launch wireless services in late 2011. In order to build up this network, management plans to invest around $100 million in the second half of fiscal 2010 and little over $100 million in each of the following few years.
NSN will supply fully 3G and 4G super-fast LTE enabled network infrastructure to Shaw Communications. Using the Advanced Wireless Services band, this next-generation high-speed wireless network will enable Shaw to offer innovative mobile broadband services to its customers.
After a pathetic 2009, we identify a ray of hope for NSN. The company is the second largest telecom infrastructure developer of the world with 21% market share. However, it is facing severe competitive pressure from the Chinese giant Huawei Technologies Co. Ltd. Of late, management has taken several steps to improve its financials. The company is now giving more competitive bid prices for any contract. This strategy helps the company secure several contracts which include some big names like Shaw Communications, TeliaSonera AB , and NTT DoCoMo (DCM).
Industry sources estimates that the number of LTE subscribers will grow from 100,000 in 2010 to 380 million in 2015. NSN expects to accelerate growth in 2010. Management estimated second quarter 2010 revenue to be in the range of $4.2 billion – $4.58 billion. Operating margin in fiscal 2010 is likely to be 0% – 2% compared with massive operating loss of around $2.43 billion (including $1.35 billion of goodwill impairment) in 2009.
Furthermore, NSN has decided to cut 5,760 jobs as part of a major restructuring program. This will help the company reduce operating expenditures by around $732 million by the end of 2011.
We maintain our Underperform recommendation for Nokia. It is currently a Zacks Rank #5 (Strong Sell) stock. For Siemens, our current recommendation is Neutral supported by Zacks Rank #3 (Hold).
Read the full analyst report on “NOK”
Read the full analyst report on “SI”
Read the full analyst report on “SJR”
Read the full analyst report on “DCM”
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