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Amazon com : to Buy Wi-Fi Startup Amid Smart Home Race

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02/12/2019 | 02:48am EST

By Maria Armental

Amazon.com Inc. on Monday disclosed its latest bet to control the so-called smart home, adding to its fold a company that offers a Wi-Fi system that ditches the traditional router.

Seattle-based Amazon and fellow tech giants Alphabet Inc.'s Google and others have been racing to use voice assistants to control everyday devices to promote their services -- and glean valuable consumer data.

By buying Eero -- a company that promises no Wi-Fi dead zones by deploying a customizable armada of small wireless routers around the house -- Amazon will go head-to-head against Google's OnHub.

Financial terms weren't disclosed, but Eero was valued at $251 million in a 2016 private financing round, according to an estimate by Sand Hill Econometrics. The San Francisco startup raised almost $100 million in venture capital from investors including Index Ventures, Initialized Capital and Menlo Ventures.

Like OnHub and Luma, in which Amazon had invested earlier, Eero offers what is known as mesh Wi-Fi networks, with access points installed around the house or an office that allow devices to connect with the closest wireless access-point without changing networks.

The Eero device plugs into a modem. Users can then customize the system, adding additional devices that plug into outlets, based on the size -- and shape -- of the house.

"From the beginning, eero's mission has been to make the technology in homes just work," Nick Weaver, Eero's chief executive and one of its founders, said in a statement. "We started with WiFi because it's the foundation of the modern home."

Mr. Weaver, who worked at Menlo Ventures before Eero was founded in 2014, said working with Amazon could help Eero bring more systems to customers around the world.

Amazon said Eero's products and services have garnered favorable ratings with customers on the Amazon website.

"We are incredibly impressed with the eero team and how quickly they invented a WiFi solution that makes connected devices just work," said Dave Limp, who oversees the company's Alexa business as senior vice president of Amazon devices.

Amazon has been investing heavily in its Alexa virtual assistant and the Echo devices it powers. Speaking at The Wall Street Journal's WSJ Tech D.Live conference in November, Mr. Limp said the company had more than doubled the number of workers dedicated to Alexa and Echo devices since fall 2017.

Asked on Twitter about privacy and security, given Amazon's disclosure last year that one of its Echo home speakers had mistakenly recorded and shared a private conversation without permission, Eero said that it "does not track customers' internet activity and this policy will not change with the acquisition." The company added that its devices don't have microphones.

Amazon has no plans to change Eero's policies at this time, a company representative said.

Eero collects certain personal information during setup, including customers' names and email addresses and its devices and app collect data when in operation, such as the assigned IP addresses of devices connected to the network, network status, temperature, and CPU and memory usage.

--Stephen Nakrosis and Alexander Davis contributed to this article.

Write to Maria Armental at maria.armental@wsj.com

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Financials ($)
Sales 2019 275 B
EBIT 2019 17 613 M
Net income 2019 13 940 M
Finance 2019 35 040 M
Yield 2019 -
P/E ratio 2019 59,35
P/E ratio 2020 41,24
EV / Sales 2019 2,74x
EV / Sales 2020 2,25x
Capitalization 790 B
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Mean consensus OUTPERFORM
Number of Analysts 47
Average target price 2 048 $
Spread / Average Target 27%
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Jeffrey P. Bezos Chairman, President & Chief Executive Officer
Brian T. Olsavsky Chief Financial Officer & Senior Vice President
Patricia Q. Stonesifer Independent Director
Tom A. Alberg Independent Director
Thomas O. Ryder Independent Director
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