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Cisco (CSCO) to Aid Rakuten to Upgrade Network Infrastructure

Zacks Equity Research
·4-min read

Cisco Systems CSCO recently revealed that Japan-based Rakuten Mobile was leveraging its Segment Routing over IPv6 (SRv6) and Cisco Routed Optical Networking solutions to upgrade its network architecture to support 5G and Internet of Things (IoT) services for enterprise clients.

Rakuten Mobile is working on rolling out SRv6 micro-segments across its network that are part of the SRv6 network programming model, to back its 5G standalone services. Rakuten Mobile will be able to boost network resiliency and back several Service Level Agreements (SLAs) that are imperative for 5G and IoT services by migrating to SRv6, stated Cisco.

Cisco Routed Optical Networking will enable Rakuten Mobile to combine all coherent pluggable optics into a router. This will render the network more automated with speed for deployment of services coming down to 40 days from 100 days required previously, added Cisco.

Cisco Systems, Inc. Price and Consensus

Cisco Systems, Inc. Price and Consensus
Cisco Systems, Inc. Price and Consensus

Cisco Systems, Inc. price-consensus-chart | Cisco Systems, Inc. Quote

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Adoption of Cisco Routed Optical Networking solutions will help lower energy consumption by nearly 30% and subsequently slash operating costs.

For Rakuten Mobile, Cisco Customer Experience (CX) will be taking care of planning and management of the architecture design for upgrading the network and aid in accelerating time to market for latest applications and services, noted Cisco.

At present, Rakuten Mobile boasts more than four million subscribers and runs a total cloud-native mobile network. In April 2020, the company rolled out 4G service in Japan and soon after it introduced 5G non-standalone (NSA) services in the country in September 2020.

Opportunities in Optical Networking Market

According to a Verified Market Research report, the worldwide optical networking and communication market is projected to witness a CAGR of 5.58% between 2021 and 2028 and reach $37.6 billion. The need for faster network communication along with demand for high bandwidth as well as rapid adoption of cloud computing and deployment of datacenters is driving the market.

Per a Mordor Intelligence report, the global optical transport market is forecast to witness a CAGR of 15.49% between 2021 and 2026 and reach $56.09 billion. Due to exponential growth in digital traffic (due to cloud computing, video streaming services, social media and mobile applications) telecommunications service providers are rapidly upgrading their infrastructure. This is propelling the market, added the report.

These projections bode well for Cisco, which is a leading player in the networking space. To strengthen its position in the routing, switching and optical networking solutions space, Cisco acquired Acacia Communications for $4.5 billion in March this year.

Acacia is an optical networking technology company that is specializes in design, development, manufacturing and marketing of communication equipment. The company offers coherent optical interconnect products largely for content and communication service providers as well as cloud infrastructure operators.

Acacia’s optical technology when integrated with Cisco’s network and cloud security platforms is likely to bolster Cisco’s reach in the coherent technology and pluggable optics solutions’ verticals.

Zacks Rank & Stocks to Consider

Currently, Cisco carries a Zacks Rank #4 (Sell)

Some better-ranked stocks in the broader sector are Zoom Video ZM, Intuit INTU, and Silicon Motion Technology SIMO. All the stocks flaunt a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Zoom Video, Intuit and Silicon Motion is currently pegged at 15.6%, 14.8% and 8%, respectively.

+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities

In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.

Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.

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Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report

Intuit Inc. (INTU) : Free Stock Analysis Report

Silicon Motion Technology Corporation (SIMO) : Free Stock Analysis Report

Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report

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Zacks Investment Research