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Nokia to Acquire Deepfield to Strengthen IP Network Security

Zacks Equity Research

Nokia Corp. NOK has entered into a definitive agreement to acquire Deepfield, a specialist in real-time analytics for IP network performance management and security. The deal is likely to close in the first quarter of 2017, subject to customary regulatory approval. However, the financial terms of the deal has not been closed yet.  

The acquisition of Deepfield will significantly enhance Nokia’s analytics-driven network and service automation capabilities. Deepfield’s most valued product is its Internet Genome technology, which can identify over 30,000 popular cloud applications and services, along with tracking traffic runs to and through networks to reach subscribers, in real time. Nokia aims to integrate Deepfield’s big data analytics capabilities with its dynamic control capabilities of open software defined network platforms.

Nokia’s network infrastructure is primarily centred on telecom operators. Consequently, Nokia Networks acquisition of its rival company Alcatel-Lucent for $17.4 billion last year has transformed it into a formidable player in the global telecom infrastructure market.

The buyout of the wireless business of Alcatel-Lucent has significantly strengthened Nokia’s foothold in North America.  Leading U.S. telecom operators, namely, AT&T Inc. T and Verizon Communications Inc. VZ are prominent customers of Alcatel-Lucent. Additionally, Alcatel-Lucent has a strong presence in China while Nokia enjoys considerable dominance in Europe and Asia. 

Importantly, Alcatel-Lucent has lucrative assets to support the enterprise segment, which Nokia intends to capitalize on to get a strong foothold in the sector already dominated by large network infrastructure solution providers like Cisco Systems Inc. CSCO and Huawei Technologies Co. Ltd.  

The merged entity can effectively capitalize on the emerging Internet-of-Things (IoT) platform and offer competent triple-play voice, video and data solutions worldwide. The core focus areas will be next-generation 5G wireless technology, IP and software defined networking, cloud-based solutions, big data analytics, and sensors and imaging.

Price Performance of Nokia

 

So far, 2016 has turned out to be a pathetic one for Nokia. Year to date, the stock price of the company plunged a substantial 32.76% underperforming the Zacks categorized Wireless Equipment industry, which has witnessed a decline of 6.30% in the same time frame.

Nevertheless, Nokia is restructuring its wireless infrastructure gear making wings to capitalize on upcoming 5G network, IoT and lucrative enterprise solutions business. These factors are the primary reason behind the stock currently carrying a Zacks Rank #3 (Hold). You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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