The Zacks Analyst Blog Highlights: Ericsson, STMicroelectronics, Harris, Juniper Networks and Calgon Carbon

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Aug 07, 2013, 09:30 ET

CHICAGO, Aug. 7, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Ericsson (Nasdaq:ERIC-Free Report), STMicroelectronics (NYSE:STM-Free Report), Harris Corp. (NYSE:HRS-Free Report), Juniper Networks, Inc. (NYSE:JNPR-Free Report) and Calgon Carbon Corporation (NYSE:CCC-Free Report).

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Here are highlights from Tuesday's Analyst Blog:

Ericsson, STMicroelectronics Complete JV Split

Ericsson (Nasdaq:ERIC-Free Report) and STMicroelectronics (NYSE:STM-Free Report) have completed the split of their joint venture ST-Ericsson. Ericsson and STMicroelectronics had announced in Dec 2012 that they are assessing the future of their joint venture and in Mar 2013 they announced their decision to split, which was considered to be a strategic solution for the joint venture (JV).

According to the terms of the agreement, effective Aug 2, 2013, Ericsson has taken over the design, development and sales of the LTE multimode thin modem products, including 2G, 3G and 4G multimode. STMicroelectronics took over the existing ST-Ericsson products and related business including certain assemblies and test facilities. After the spin off, Ericsson will get 1,800 employees and contractors on board, while STMicroelectronics will have 950 employees.

Ericsson believes that thin modems have a strategic importance in the wireless industry. By taking over the LTE thin modem products, Ericsson plans to create an extremely focused "thin modem only" operation.

Both Ericsson and STMicroelectronics have invested huge amount to establish industry leading technology and Intellectual Property. After preliminary customer interaction, Ericsson's management is confident that thin modems will meet the requirements of the manufacturers in the fast growing smartphone and tablet markets.

While for STMicroelectronics, the split signifies a major step ahead in achieving its new financial model target, thereby allowing STMicroelectronics to strengthen its capabilities to fuel future growth in specific key product areas.

Furthermore, with the transfer of competencies from ST-Ericsson, STMicroelectronics will strengthen its skills in the areas of application processors, RF, analog and power including software and complex system integration. Apart from this, ST-Ericsson joint venture portfolio also included devices that were a strategic fit for STMicroelectronics' focus on the rapidly growing segments of the wireless semiconductor market.

Ericsson currently has a Zacks Rank #3 (Hold). Other stocks in the same industry that are worth considering at the moment are Harris Corp. (NYSE:HRS-Free Report) and Juniper Networks, Inc. (NYSE:JNPR-Free Report). Both carry a Zacks Rank #2 (Buy).

Calgon Carbon Gets 10-Year Contract in UK

Chemviron Carbon, the European operating group of pollution control company Calgon Carbon Corporation (NYSE:CCC-Free Report), has won a 10-year contract from Thames Water to reactivate spent activated carbon used to treat drinking water. Thames is the largest provider of drinking water and wastewater services in the UK.

The contract value will depend on the amount of carbon reactivated on an annual basis, which is expected to be around 11 million lbs (5,000 million tons).

Chemviron is expected to complete the $9.5-million renovation and expansion of the Tipton plant (Tipton) located near Birmingham, U.K., in 2014. Thereafter, Chemviron plans to reactivate the spent carbon at the facility.

Tipton plant's production capacity is expected to increase to 18 million lbs (8,200 million tons) from 13 million lbs (5,800 million tons) after the plant's renovation and expansion. However, until the completion of the expansion activities, Thames' carbon will be reactivated at Chemviron Carbon's facilities in Grays, UK and Feluy, Belgium.

Management claims Chemviron to be the most effective reactivator in the UK. It offers water utilities and a comprehensive range of value-added technical and site services. Thames Water provides high-quality drinking water to their customers. Thus, the collaboration will strengthen Calgon Carbon and Thames' decades-old relationship.

Calgon Carbon delivered impressive first-quarter 2013 results on May 6. The company's earnings topped the Zacks Consensus Estimate, but sales fell short. While Calgon Carbon is expected to gain from its cost reduction and pricing actions, it remains exposed to currency headwinds and weakness in its equipment business.

Calgon Carbon remains confident in its ability to balance the need for future investment with responsibility to provide short-term returns. The company continues to focus on ballast water treatment, reactivation services and mercury removal as its basis for sustainable growth. It remains focused on improving margins across all regions. However, its strategic initiatives position it for significant growth in the longer term.

Calgon Carbon retains a Zacks Rank #1 (Strong Buy)

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