Amazon.com Inc (Nasdaq: AMZN), in an effort to further solidify its visibility in the consumer robotics domain, is taking over iRobot Corp (Nasdaq: IRBT), which is famous for its robotic vacuum cleaner Roomba, launched two decades ago. Following the acquisition news, the stock of Amazon lost 1.24%, or $1.77, to close at $140.80. The share price of iRobot rallied $9.55, or $19.10, to close at $59.54.
Seattle, Washington-based Amazon has accepted to take over iRobot, which was established in 1990 by three robotics specialists of Massachusetts Institute of Technology’s (MIT) Artificial Intelligence Lab, in an all-cash deal worth $1.70 billion. Specifically, Amazon is paying $61 per share for the Bedford, Massachusetts-based company. Colin Angle, CEO of iRobot, will retain his position after the completion of the takeover, which is subject to the approval of the company’s shareholders and US regulators.
The CEO will continue to run the company once the deal closes. The deal will need the approval of regulators and iRobot’s shareholders.
Following the success of Roomba, iRobot has widened its product range with the introduction of several home cleaning robots such as lawn mowers, mops, and even pool cleaners. iRobot also offers a subscription program for refilling and other facilities.
Interestingly, Amazon is acquiring iRobot at a time when the designer and manufacturer of AI-driven robots is facing challenging times.
iRobot reported second-quarter revenues of $255.40 million, missing the $303 million revenue forecast by analysts polled by Refinitiv. The reported figure reflects a drop of 30% on a y-o-y basis. Also, the company’s adjusted losses widened to $0.35 per share. Analysts polled by Refinitiv had anticipated a loss of $1.55 per share. iRobot is also slashing its workforce by 140, representing 10% of its total employee count, as it stares at increasing expenses and declining revenues.
The decline in revenue was mainly due to unexpected decreases, postponements, and cancellations of orders from dealers in Europe, North America, Africa, and the Middle East.
iRobot’s business was affected by logistics issues in the past few quarters. iRobot acknowledged that it currently has an inventory surplus against the backdrop of “lower-than-anticipated” orders from dealers.
Dave Limp, head of Amazon’s hardware gadgets, opined as follows: “Customers like iRobot devices, and I’m eager to collaborate with the iRobot staff to discover methods to transform people’s lives simpler and even more joyful.”
It can be remembered that Amazon entered the robotics-based consumer goods domain last year with the debut of the Astro robot (specifically designed for the home), priced at $1,500 and embedded with Alexa (digital support). The company also unveiled a series of smart home gadgets, including voice-triggered microwaves, thermometers, and even doorbells.
This is the fourth notable takeover of Amazon in the past five years. In 2017, Amazon acquired Whole Foods (grocery chain) for $13.70 billion. Last year, Amazon bought MGM (film studio) for $8.45 billion. In July, the company revealed the acquisition of One Medical (a health clinic chain) for $3.90 billion.
The news is expected to keep the stock of Amazon range-bound with a slight bullish bias in the future.
The historical price chart indicates that the stock of Amazon is rising after getting solid support at 105 levels. The next major resistance is anticipated near 155. Additionally, the stock is trading above its 50-day moving average while the MACD indicator is showing a positive reading. Therefore, we are anticipating the stock of Amazon to rally in the days ahead.
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