Seattle Times (WA) (March 20, 2012 9:02 AM)

By Amy Martinez, The Seattle Times

March 20--Amazon.com said Monday it's buying warehouse-robotics company Kiva Systems for about $775 million in cash.

Privately held Kiva, which makes warehouse-automation systems that use robots to move merchandise, will remain based in North Reading, Mass.

Major retailers such as Staples, Saks Fifth Avenue and Gap have deployed Kiva's robots to help fill Internet orders. Other e-commerce companies bought by Amazon, including Diapers.com and Zappos, are among Kiva's customers.

The deal, expected to become final in the next three months, likely will bring more robotics to Amazon's warehouses, which rely on large numbers of employees to pack and ship a wide array of products sold on the company's website.

Seattle-based Amazon employed 56,200 people worldwide at the end of December, up from 51,300 three months earlier.

"This is a way to improve efficiency," analyst Scott Tilghman, of Caris & Co., told Reuters. "Given the scale of Amazon's operations, it makes sense to have this capability in house."

The Wall Street Journal described Kiva as a logistics-technology company that makes robotic shelf and pallet systems for warehouses, "allowing Internet retailers to cut down on the numbers of people they need to select items that are then packed off for shipping."

Amazon has been investing heavily in new warehouses to handle growth in its retail business. Worldwide, the company added 13 new warehouses in 2010 and 17 more in 2011, giving it a total of nearly 70.

Dave Clark, Amazon vice president of global customer fulfillment, said the Internet retailer long has used automation at its warehouses.

"Kiva's technology is another way to improve productivity by bringing the products directly to employees to pick, pack and stock," Clark said in a statement.

In late January, Amazon said its fourth-quarter sales rose 35 percent from a year ago to $17.43 billion, while its profit declined 58 percent to $177 million.

Amazon reported $5.3 billion in cash at the end of December.

Its stock closed up 47 cents, less than 1 percent, to $185.52 before Monday's announcement. Shares were virtually flat in after-hours trading.

Amy Martinez: 206-464-2923 or [email protected]

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