Would Amazon Spin Off This Profitable Division?
Amazon’s (NASDAQ:AMZN) cloud computing division may dominate the industry, but the Internet retailer may be looking to divest that unit; at least according to Oppenheimer analyst Tim Horan, who thinks that Amazon Web Services would do better as a separate publicly traded company.
“We believe an ultimate spinoff of AWS is inevitable due to its channel conflicts and the need to gain scale,” Horan wrote in a note seen by Investor’s Business Daily. “We see the business as extremely valuable on a stand-alone basis, possibly even operating as a REIT,” a type of investment trust.
For the cloud computing division, separating from Amazon would mean the service would no longer be working with rivals; Amazon’s Prime Instant Video service competes with Netflix (NASDAQ:NFLX), a client of AWS. Currently, many public cloud users, including online retailers, have little choice but to fund one of their biggest rivals, Amazon. But by leaving Amazon, the infrastructure-as-a-service could expand its customer base…