Loral Space in ‘advanced talks’ to combine with Telesat

Loral Space & Communications declares $5.50 per share special dividend

Loral Space & Communications (LORL) announced that its board of directors has declared a special dividend of $5.50 per share for an aggregate dividend of approximately $170.5M.

The dividend is payable on May 28 to holders of record of Loral voting and non-voting common stock as of the close of business on May 14.

Loral declares a one time $5.50 special dividend, Stockwinners

Michael Targoff, Vice Chairman of Loral’s Board of Directors, explained that, “in an effort to maximize shareholder value, we have for some time been exploring, and are now in advanced discussions with our Canadian co-owner in Telesat, Public Sector Pension Investment Board, regarding the combination of Loral and Telesat into one public company.

Telesat to combine with Loral Space, Stockwinners

“Given the advanced state of the discussions regarding the combination transaction, it is now appropriate to pay to our shareholders a significant portion of the $243M cash distribution that we previously received from Telesat.”

“It is our intention,” Mr. Targoff continued, “to request that the Board declare an additional distribution to our shareholders in coordination with signing definitive agreements for the combination transaction.”

The company added: “Notwithstanding the advanced state of the discussions regarding the potential combination transaction, there can be no assurance as to whether or when Loral will be able to conclude the ongoing negotiations, that Loral will enter into any agreement that provides for a strategic transaction involving Telesat or Loral’s interest therein, that any strategic transaction will occur, or that any particular economic, tax, structural or other objectives or benefits with respect to any strategic transaction will be achieved.”

Loral Space & Communications Inc. offers satellite-based communications services to the broadcast, telecom, corporate, and government customers worldwide.

Telesat, formerly Telesat Canada, is a Canadian satellite communications company.  The company is now the fourth-largest fixed satellite services provider in the world. It owns a fleet of satellites, with others under construction, and operates additional satellites for other entities.

LORL is up 31% to $23.10.

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AVX sold for about $3.7B

AVX to be acquired by Kyocera for $21.75 per share in cash

AVX Corp. (AVX) announced that Kyocera and AVX have entered into a definitive merger agreement providing for the acquisition by Kyocera of all the outstanding shares of common stock of AVX not owned by Kyocera pursuant to an all-cash tender offer for $21.75 per share, followed by a squeeze-out merger in which all of the outstanding shares of AVX common stock not tendered in the Tender Offer will be converted into the right to receive $21.75 per share of common stock, in cash.

Kyocera currently owns approximately 72% of the outstanding shares of AVX common stock.

Following completion of the Transaction, AVX will become a wholly owned subsidiary of Kyocera.

Kyocera buys the rest of AVX shares that it did not own, Stockwinners

The $21.75 offer price represents a 44.6% premium over AVX’s closing price on November 26, 2019 and a 42.1%, 42.4%, and 34.9% premium over AVX’s 1-, 3- and 12- month average closing share price, respectively.

As previously announced, following receipt of a proposal from Kyocera to acquire all of the outstanding shares of AVX common stock that Kyocera does not own for a price of $19.50 in cash, the AVX board of directors appointed a special committee consisting of three independent directors of AVX for purposes of evaluating and negotiating a potential transaction with Kyocera.

AVX Corp. sold to Kyocera, Stockwinners

Following the formation of the Special Committee, Kyocera and the Special Committee have been in discussions and negotiations regarding Kyocera’s proposal to acquire all of the outstanding shares of common stock of AVX not owned by Kyocera.

The board of AVX, acting on the recommendation of the Special Committee, has approved the Transaction and determined to recommend that the AVX stockholders tender their shares in the Tender Offer.

The Transaction is subject to customary closing conditions and is not subject to any financing condition. Kyocera has announced that it currently expects the Transaction to close in the fourth quarter of Kyocera’s fiscal year ending March 2020.

The Tender Offer will be subject to customary conditions and will not be subject to any minimum condition.

AVX is a leading worldwide manufacturer, supplier, and reseller of a broad line of electronic components, interconnect, sensing and control devices, and related products. Electronic components and connector, sensing and control products manufactured or resold by AVX are used in many types of end use products, including those in telecommunications, automotive, transportation, energy harvesting, consumer electronics, military/aerospace, medical, computer, and industrial markets. 

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Gilat Satellite Networks sold for $532M

Comtech to acquire Gilat Satellite Networks for $10.25 per share

Comtech Telecommunications Corp. (CMTL) and Gilat Satellite Networks Ltd. (GILT) jointly announced that Comtech has agreed to acquire Gilat in a cash and stock transaction for $10.25 per Gilat ordinary share of which 70% will be paid in cash and 30% in Comtech common stock, resulting in an enterprise value of approximately $532.5 million.

Gilat sold for $522M, Stockwinners

Founded in 1987 with its headquarters in Israel, Gilat is a worldwide leader in satellite networking technology, solutions and services with market leading positions in the satellite ground station and in-flight connectivity solutions markets and deep expertise in operating large network infrastructures.

Comtech goes shopping by buying Gilat, Stockwinners

Based on Comtech’s fiscal year 2019 actual results and Gilat’s trailing twelve-month results through June 30, 2019, on a pro-forma basis, Comtech would have reported approximately $926.1M of revenue with Adjusted EBITDA of approximately $130.2M.

The combined companies would employ approximately 3,000 people and offer best-in-class satellite technology, public safety and location technology and secure wireless solutions to commercial and government customers around the world.

Fred Kornberg, Chairman of the Board and CEO of Comtech, said,

“I am excited to have reached this agreement with Gilat and believe this combination is beneficial to the stakeholders of both companies. The acquisition better positions Comtech to take advantage of key marketplace trends, particularly the growing demand for satellite connectivity and the enormous long-term opportunity set that is emerging in the secure wireless communications market.

I believe that the combination of accelerating satellite connectivity demand and the increasing availability of low-cost satellite bandwidth, makes this a perfect time to unify Comtech and Gilat’s solutions and offer our combined customers best-in-class platform-agnostic satellite ground station technologies.

Gilat is an exceptional business that has developed extraordinary technology and has a well-respected product portfolio supported by strong research and development capabilities. I welcome Gilat’s entire talented workforce to the Comtech family.”

Dov Baharav, Chairman of the Board of Gilat, said, “The Gilat Board of Directors and management believe this highly strategic combination is compelling.

Gilat equipment allows reliable communication, Stockwinners

It is an excellent outcome for our shareholders who receive both cash and an equity interest in a strong company with a broader range of products and the benefits of combined expertise and resources that is well positioned to create future value against a highly favorable industry backdrop.

I have long admired Comtech’s commitment to technology leadership and I firmly believe that employees will have expanded opportunities for career development. No doubt, the future will be very bright for Comtech and Gilat and all of our stakeholders.”

In light of the agreement between Comtech (CMTL) and Gilat (GILT), Gilat has cancelled its fourth quarter and fiscal 2019 year-end conference call and webcast previously scheduled for February 19, 2020. Once the transaction closes, Comtech will provide combined revenue, Adjusted EBITDA and diluted earnings per share guidance in a future announcement.

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Shape Security sold for $1B

F5 Networks to acquire Shape Security for approximately $1B in cash

F5 Networks (FFIV) and Shape Security announced a definitive agreement under which F5 will acquire all issued and outstanding shares of the privately held Shape for a total enterprise value of approximately $1B in cash, subject to certain adjustments.

F5 Networks purchases Shape Security, Stockwinners

Shape protects the largest banks, airlines, retailers, and government agencies with sophisticated bot, fraud, and abuse defense.

In particular, Shape defends against credential stuffing attacks, where cybercriminals use stolen passwords from third-party data breaches to take over other online accounts.

Shape has built an advanced platform, utilizing artificial intelligence and machine learning, supported by powerful cloud-based analytics to protect against attacks that bypass other security and fraud controls.

Shape Security sold for $1B, Stockwinners

Upon closing of the acquisition, Derek Smith, and the leadership team will join F5 in key management roles.

Shape will remain located in their current Santa Clara headquarters.

The acquisition of Shape is consistent with F5’s vision to build the best end-to-end multi-cloud application services company. It accelerates F5’s product and total revenue growth; speeds F5’s transition to a software- and SaaS-driven business model; and is expected to meaningfully increase F5’s software subscription mix in fiscal year 2020.

F5 expects to achieve breakeven non-GAAP EPS within 24 months of closing the acquisition and anticipates that the combination will be accretive to free cash flow per share within 12 months of closing.

F5 expects to fund the transaction through cash on its balance sheet and $400M in a Senior Unsecured Term Loan A. The acquisition has been approved by the boards of directors of both F5 and Shape.

The acquisition is subject to regulatory approvals and other customary closing conditions. The transaction is expected to close in the first calendar quarter of 2020.

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Enterprise Spending Drought

Forescout pummeled, Cisco falls amid weakening enterprise spending view

Shares of publicly-traded companies in the network security space are trading lower after Forescout Technologies (FSCT) announced preliminary results for its third quarter.

Forescout slashed its view on sales and profit for the quarter, as sales are seen getting pushed out to future quarters amid a weakening in the global macroeconomic environment.

Forescout shares tumble on weak demand, Stockwinners

EXPECTATIONS FALL

Forescout now sees total Q3 revenue of $90.6M-$91.6M as compared to its prior view of $98.8M-$101.8M. Non-GAAP operating loss for Q3 is expected to be in the range of $1.6M-$1.4M, compared to the company’s prior guidance range for an operating profit of $2.6M-$3.6M.

Forescout CEO Michael DeCesare said, “Q3 results were impacted by extended approval cycles which pushed several deals out of the third quarter.

This was most pronounced in EMEA against the backdrop of a challenging macro-economic environment. These deals were not lost to competitors and we are working to get them over the finish line.” JPMorgan analyst Sterling Auty downgraded ForeScout to Neutral from Overweight after the company announcement.

Auty cut his price target for ForeScout shares to $35 from $54. He also called this the “first notable negative preannouncement” in the software sector and thinks investors will be watching carefully to see if there are further issues that will cause multiples in the space to contract further.

ENTERPRISE SPENDING DROUGHT

Adding to the negativity in the Enterprise space was a Cisco Systems (CSCO) downgrade from Goldman Sachs.

Goldman Sachs downgrades Cisco Systems, Stockwinners

Goldman Sachs analyst Rod Hall downgraded Cisco Systems to Neutral from Buy with a price target of $48, down from $56.

Large enterprise spending will continue to weaken and telecom spending activity will remain depressed in the near term, Hall stated.

The analyst noted that Goldman’s Enterprise Activity Index deteriorated in September, while his latest reseller survey was also incrementally negative on enterprise spending trends. PRICE ACTION: Shares of Forescout are down over 35.5% to $25.26 while Cisco is down over 2%.

OTHER STOCKS TO WATCH

Other companies to watch in the enterprise and security space include A10 Networks (ATEN), Check Point (CHKP), CyberArk (CYBR), Cyren (CYRN), and Fortinet (FTNT).

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Acacia Communications sold for $2.6B

Cisco to acquire Acacia Communications for $70.00 per share in cash

Acacia Comms tumbles, Stockwinners.com
Acacia Comms. sold to Cisco, Stockwinners.com

Cisco (CSCO) and Acacia Communications (ACIA) announced they have entered into a definitive agreement under which Cisco has agreed to acquire Acacia.

An existing Cisco supplier, Acacia designs and manufactures high-speed, optical interconnect technologies that allow web scale companies, service providers, and data center operators to meet the fast-growing consumer demands for data.

Cisco buys Acacia Comms. at a 47% premium, Stockwinners

Under the terms of the agreement, Cisco has agreed to acquire Acacia for $70.00 per share in cash, or for approximately $2.6B on a fully diluted basis, net of cash and marketable securities.

The acquisition is expected to close during the second half of Cisco’s FY2020, subject to customary closing conditions and required regulatory approvals.

Cisco, whose equipment makes up the backbone of the internet and corporate networks, has recently rekindled growth by revamping existing products and adding new software and services under a corporate makeover by Chief Executive Officer Chuck Robbins. In May, the company gave a bullish sales and profit forecast for the current period, a sign that corporations continue to spend on computer networks despite the trade dispute between China and the U.S.

Bill Gartner, who heads Cisco’s Optical Systems and Optics, wrote that Acacia’s products “are designed to transform communications networks through improvements in performance, capacity and cost.” He added that Acacia’s coherent optics technology will build on Cisco’s strength in optical, silicon, and software technologies.

Upon completion of this transaction, Acacia employees will join Cisco’s Optical Systems and Optics business within the networking and security business under David Goeckeler.

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Cypress Semiconductor sold for $23.85 a share

Infineon to acquire Cypress Semi in deal with enterprise value of EUR9B

Infineon to acquire Cypress Semi in deal with enterprise value of EUR9B , Stockwinners

Infineon Technologies (IFNNY) and Cypress Semiconductor Corporation (CY) announced that the companies have signed a definitive agreement under which Infineon will acquire Cypress for $23.85 per share in cash, corresponding to an enterprise value of EUR9B.

The companies said that expected economies of scale will create cost synergies of EUR180M per annum by 2022.

The complementary portfolios will enable the offering of further chip solutions with a revenue synergies potential of more than EUR1.5B per annum in the long term.

The offer price represents a 46% premium to Cypress’s unaffected 30-day volume-weighted average price during the period from 15 April to 28 May 2019, the last trading day prior to media reports regarding a potential sale of Cypress.

Cypress expects to continue its quarterly cash dividend payments until the transaction closes.

This includes Cypress’s previously announced quarterly cash dividend of 11c per share, payable on July 18, 2019 to holders of record of Cypress’s common stock at the close of business on June 27, 2019.

The funding of the acquisition is fully underwritten by a consortium of banks. Infineon is committed to retaining a solid investment grade rating and, consequently, Infineon intends to ultimately finance approximately 30 percent of the total transaction value with equity and the remainder with debt as well as cash on hand.

The financial policy to preserve a strategic cash reserve remains in place. The acquisition is subject to approval by Cypress’s shareholders and the relevant regulatory bodies as well as other customary conditions.

The closing is expected by the end of calendar year 2019 or early 2020.

Hassane El-Khoury, President and CEO of Cypress, said:

“The Cypress team is excited to join forces with Infineon to capitalize on the multi-billion dollar opportunities from the massive rise in connectivity and computing requirements of the next technology waves. This announcement is not only a testament to the strength of our team in delivering industry-leading solutions worldwide, but also to what can be realized from uniting our two great companies. Jointly, we will enable more secure, seamless connections, and provide more complete hardware and software sets to strengthen our customers’ products and technologies in their end markets. In addition, the strong fit of our two companies will bring enhanced opportunities for our customers and employees.”

CY closed at $17.82. IFNNY closed at $17.77.

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HP Enterprise to acquire Cray for $35 per share

HP Enterprise to acquire Cray in deal valued at $1.3B

HP Enterprise to buy Cray Research, Stockwinners

Hewlett Packard Enterprise (HPE) and Cray (CRAY) announced that the companies have entered into a definitive agreement under which HPE will acquire Cray for $35.00 per share in cash, in a transaction valued at approximately $1.3B, net of cash.

Cray Inc. designs, develops, manufactures, markets, and services computing products for high-performance computing, data analytics, and AI markets. It operates through Supercomputing, Storage and Data Management, Maintenance and Support, and Engineering Services and Other segments. 

Cray sold to HPE for $1.3 billion, Stockwinners

“Bringing together HPE and Cray enables an enhanced financial profile for the combined company that includes several revenue growth opportunities and cost synergies.

The companies expect the combination to drive significant revenue growth opportunities by:

Capitalizing on the growing HPC segment of the market and Exascale opportunities; Enhancing HPE’s customer base with a complementary footprint in federal business and academia and the company’s ability to accelerate commercial supercomputing adoption; Introducing new offerings in AI / ML and HPC-as-a-service with HPE GreenLake; We also expect to deliver significant cost synergies through efficiencies and by leveraging proprietary Cray technology, like the Slingshot interconnect, to lower costs and improve product performance.”

As a result of the enhanced financial profiles of the combined companies, the deal is expected to be accretive to HPE non-GAAP operating profit and earnings in the first full year following the close.

As part of the transaction, HPE expects to incur one-time integration costs that will be absorbed within HPE’s FY20 free cash flow outlook of $1.9B-$2.1B that remains unchanged.

The transaction is expected to close by the first quarter of HPE’s fiscal year 2020, subject to regulatory approvals and other customary closing conditions.

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Zayo Group sold for $35 per share

Zayo Group to be acquired by Digital Colony, EQT in deal valued at $14.3B

Zayo Group Holdings (ZAYO) announced that it has signed a definitive merger agreement to be acquired by affiliates of Digital Colony Partners and the EQT Infrastructure IV fund.

Zayo sold for $14.3 billion, Stockwinners

The transaction would result in Zayo transitioning from a public company to a private company.

Zayo Group Holdings, Inc. provides bandwidth infrastructure solutions for the communications industry in the United States, Canada, and Europe.

Under the new ownership, the Zayo team would continue to execute the Company’s strategy and remain headquartered in Boulder, Colorado.

Under the terms of the agreement, which was unanimously approved by Zayo’s Board of Directors, shareholders will receive $35.00 in cash per share of Zayo’s common stock in a transaction valued at $14.3 billion, including the assumption of $5.9 billion of Zayo’s net debt obligations.

The offer price represents a 32% premium to the volume-weighted price average of the last six months of $26.44. Dan Caruso, Zayo’s Chairman and CEO, said, “Digital Colony and EQT share our vision that Zayo’s Fiber Fuels Global Innovation.

Both are experienced global investors in the communications infrastructure space, and they appreciate our extraordinary fiber infrastructure assets, our highly talented team and our strong customer base. I am confident this partnership with EQT and Digital Colony will empower Zayo to accelerate its growth and strengthen its industry leadership.”

“Following a comprehensive review of strategic alternatives, the Zayo Board of Directors concluded that the sale of Zayo to Digital Colony and EQT Infrastructure is in the best interest of Zayo and all its stakeholders,” said Yancey Spruill, Zayo’s Lead Independent Director. “

The transaction delivers immediate and substantial value to shareholders and will strengthen Zayo’s financial flexibility, enabling the company to increase investments and better position itself for long-term growth and profitability.”

The closing of the deal is subject to customary conditions, including regulatory clearance and Zayo shareholder approvals.

The transaction is expected to close in the first half of calendar 2020.

Goldman Sachs and J.P. Morgan are serving as financial advisors to Zayo Group in connection with the transaction and Skadden Arps is serving as legal counsel.

Morgan Stanley and Deutsche Bank are acting as financial advisors to Digital Colony and EQT Infrastructure, and Simpson Thacher is serving as legal advisor.

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Altaba to dissolve itself

Altaba board approves plan of complete liquidation and dissolution

Altaba to dissolve itself, Stockwinners

Altaba (AABA) announced last night that the fund’s board of directors has approved the liquidation and dissolution of the fund pursuant to a plan of complete liquidation and dissolution, subject to stockholder approval.

Altaba Inc. is a non-diversified, closed-end management investment company based in New York City that was formed from the remains of Yahoo! Inc. after Verizon acquired Yahoo’s Internet business  The company that remained after the purchase changed its name to Altaba Inc. on June 16, 2017.

Verizon completed its acquisition of Yahoo!’s core internet business on June 13, 2017, and put the assets under a new subsidiary named Yahoo! Holdings within its newly created division, Oath.

The only Yahoo!-branded interest held by Altaba was its stake in the joint venture Yahoo! Japan but this stake has since been sold to SoftBank Group.

The fund intends to file a proxy statement with the U.S. Securities and Exchange Commission with respect to a special meeting of stockholders to seek stockholder approval of the liquidation and dissolution pursuant to the plan.

Altaba said the fund “has pursued a number of strategies with the goal of achieving its investment objective, including by repurchasing the shares, both in the open market and through an exchange offer of American Depository Shares of Alibaba Group Holding Limited (BABA) and cash for shares, the simplification of the fund through the disposition of assets other than its position in Alibaba and the resolution of certain actual and contingent liabilities, and through other means.

After carefully considering the risks, timing, viability and potential impact on the fund’s stockholders of additional strategies potentially available to the fund to achieve its investment objective, as well as the recommendation of management, and in consultation with the fund’s advisors, the board unanimously determined that the liquidation and dissolution pursuant to the plan is advisable and in the best interests of the fund and its stockholders.

” If the liquidation and dissolution pursuant to the plan is approved by the fund’s stockholders, the fund expects to sell or otherwise dispose of all of the remaining ordinary shares and ADSs of Alibaba held by the fund, other than Alibaba ADSs, if any, to be distributed in kind, and its equity interests in Excalibur IP, to the extent any such assets have not been sold or disposed of by the fund before the special meeting, Altaba stated.

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Quantenna sold for $1.07 billion

ON Semiconductor to acquire Quantenna for $24.50 per share

Quantenna sold for $1.07 billion, Stockwinners

ON Semiconductor Corporation (ON) and Quantenna Communications, Inc. (QTNA) announced that they have entered into a definitive agreement for ON Semiconductor to acquire Quantenna for $24.50 per share in an all cash transaction.

The acquisition consideration represents equity value of approximately $1.07B and enterprise value of approximately $936M, after accounting for Quantenna’s net cash of approximately $136M at the end of fourth quarter of 2018.

The acquisition significantly enhances ON Semiconductor’s connectivity portfolio with the addition of Quantenna’s industry leading Wi-Fi technology and software capabilities.

Following consummation, the transaction is expected to be immediately accretive to ON Semiconductor’s non-GAAP earnings per share and free cash flow, excluding any non-recurring acquisition related charges, the fair value step-up inventory amortization, and amortization of acquired intangibles.

The transaction is not subject to a financing condition. ON Semiconductor intends to fund the transaction through cash on hand and available capacity under its existing revolving credit facility.

Completion of the transaction is subject to approval by Quantenna’s stockholders, regulatory approvals and other customary closing conditions.

The transaction has been approved by ON Semiconductor’s and Quantenna’s boards of directors and is expected to close in the second half of 2019.

No approval of the stockholders of ON Semiconductor is required in connection with the proposed transaction.

Note that QNTA was featured by Stockwinners on February 22 at $18.00.

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5G Service coming to Chicago and Minneapolis

Verizon discloses pricing for first 5G mobile service

Verizon brings 5G service to Chicago and Minneapolis, Stockwinners

Verizon (VZ) earlier said it will launch its 5G Ultra Wideband Network in Chicago and Minneapolis on April 11.

To coincide with this launch, Verizon is offering the new 5G moto mod, which is exclusive to Verizon. Beginning March 14, customers anywhere in the U.S. can pre-order the 5G moto mod.

Verizon said: “Select areas of Chicago and Minneapolis will be the first to experience Verizon’s 5G Ultra Wideband mobile service, and the company has plans to rapidly expand the coverage area.

Last month, Verizon announced that it intends to launch its 5G Ultra Wideband network in more than 30 U.S. cities in 2019.”

It added, “For a limited time, preorder the 5G moto mod for just $50 ($349.99 retail).

5G Antennas are the size of a large pizza, Stockwinners

Verizon postpaid customers with any Verizon unlimited plan, including Go Unlimited, Beyond Unlimited or Above Unlimited, get unlimited 5G data for $10 per month (with the first three months free).

To buy a 5G moto mod, customers must either have an active moto z3 on their account or purchase a moto z3 at the same time as the 5G moto mod.”

What is 5G?

Like the earlier generation 2G, 3G, and 4G mobile networks, 5G networks are digital cellular networks, in which the service area covered by providers is divided into a mosaic of small geographical areas called cells.

 Analog signals representing sounds and images are digitized in the phone, converted by an analog to digital converted transmitted as a stream of bits.

All the 5G wireless devices in a cell communicate by radio waves with a local antenna array and low power automated transceiver(transmitter and receiver) in the cell, over frequency channels assigned by the transceiver from a common pool of frequencies, which are reused in geographically separated cells.

The local antennas are connected with the telephone network and the Internet by a high bandwidth optical fiber or wireless backhaul connection. Like existing cellphones, when a user crosses from one cell to another, their mobile device is automatically “handed off” seamlessly to the antenna in the new cell.

Their major advantage is that 5G networks achieve much higher data rates than previous cellular networks, up to 10 Gbit/s; which is faster than current cable internet, and 100 times faster than the previous cellular technology, 4G LTE.

 Another advantage is lower network latency (faster response time), below 1 ms (millisecond), compared with 30 – 70 ms for 4G.[ Because of the higher data rates, 5G networks will serve not just cellphones but are also envisioned as a general home and office networking provider, competing with wired internet providers like cable. Previous cellular networks provided low data rate internet access suitable for cellphones, but a cell tower could not economically provide enough bandwidth to serve as a general internet provider for home computers.

5G networks achieve these higher data rates by using higher frequency radio waves, in or near the millimeter wave band from 30 to 300 GHz, whereas previous cellular networks used frequencies in the microwave band between 700 MHz and 3 GHz.

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