Please ensure Javascript is enabled for purposes of website accessibility

Instant Analysis: Acquires NICE

By Evan Niu, CFA - Feb 12, 2016 at 2:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The tech titan scoops up a small Italy-based software company to beef up Amazon Web Services even further.

What happened?
E-commerce giant (AMZN -3.92%) has acquired NICE, a small company based in Italy, to be part of its growing Amazon Web Services business. NICE offers software and services for high-performance and technical computing that allow customers to optimize and centralize computing tasks that require a lot of performance. NICE also facilitates data visualization and supports mobile devices.

Amazon did not disclose financial terms, but said it expects the deal to close in the first quarter. Existing customers will not see any interruptions in service, and NICE will soon integrate with AWS.

Does it matter?
AWS continues to be an incredibly important business for Amazon. The cloud-computing segment has become so important that Amazon now discloses financial results for AWS. The company continues to expand its cloud-based offerings and remains the market leader by a large margin, so it makes plenty of sense to strengthen AWS through targeted acquisitions when appropriate.

For instance, AWS generated nearly $1.9 billion in operating income throughout 2015, for a 24% operating margin. That's meaningfully higher than the 4% operating margin that Amazon's core North American e-commerce business generates. Naturally, Amazon promptly reinvests those profits back into the business for future growth, so the contribution from AWS is extremely important to future results.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned, Inc. Stock Quote, Inc.
$108.78 (-3.92%) $-4.44

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.