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Ericsson (ERIC) Sets Up Quantum Research Hub in Canada

In a concerted effort to explore quantum-based algorithms in telecom networks and quantum computing, Ericsson ERIC recently announced that it has set up a quantum research hub in Montreal, Canada. The hub is established in collaboration with the University of Ottawa and the University of Sherbrooke. It is likely to fuel the growth of Canada’s economy, as diverse sectors aim to harness quantum capabilities for improved productivity.

Ericsson intends to employ post-doctoral fellows at the universities in the hub to support the quantum research projects of its researchers. The hub is likely to provide the perfect test bed for academic challenges with requisite networking competence and facilities to conduct advanced research.

Leveraging quantum mechanics phenomena, quantum computing has the ability to perform complex calculations at a faster speed. It creates multi-dimensional spaces to represent very large problems and enables users to deploy algorithms to translate complicated problems into understandable forms.

The quantum computing industry is expected to play a critical role in uplifting the economy of Canada as technologies come to fruition and generate additional jobs by innovating hybrid quantum-classical and quantum-inspired protocols. With more than 70 years of experience, Ericsson Canada is well poised to augment the regional quantum ecosystem with its research and development capabilities and existing relationships with leading academic institutions.

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 143 live 5G networks across the globe spanning 62 countries.

The stock has lost 41.6% over the past year compared with the industry’s decline of 18.9%.

Zacks Investment Research
Zacks Investment Research


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Ericsson currently has a Zacks Rank #4 (Sell).

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

Key Picks

Arista Networks, Inc. ANET, sporting a Zacks Rank #1, is likely to benefit from 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 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.

Deutsche Telekom AG DTEGY, sporting a Zacks Rank #1, is likely to benefit from the accretive post-merger integration of T-Mobile US Inc. and Sprite in the United States, in which it owns about 43% stake. The removal of forced cable TV access in multiple dwelling units in Germany through telecom legislation is likely to help Deutsche Telekom expand its broadband market.

Moreover, an aggressive fiber rollout strategy across the country is expected to augment its domestic market hold. The Zacks Consensus Estimate for current-year earnings for Deutsche Telekom has been revised 21.8% upward over the past year. It has a VGM Score of A and a long-term earnings growth expectation of 15.7%.

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