Best Buy sheds its cloud computing unit

Grazed from The Star Tribune. Author: Steve Alexander.

Best Buy appears to be jumping off the cloud. The company said Tuesday that it is selling its MindShift Technologies cloud-computing business to the Japanese firm Ricoh for an undisclosed amount. In 2011, Best Buy paid $175 million for MindShift, a Waltham, Mass., provider of information technology and cloud computing services to small businesses. In cloud computing, customers can use computers, software and data storage in remote data centers rather than buying their own.

At the time, acquiring MindShift was seen by analysts as a way for Best Buy to diversify beyond selling computers and other electronic devices, as well as the company’s first major effort to enter the cloud computing market. Ricoh said MindShift, which has 650 employees, will continue to operate under the same name and management. The deal is expected to close in February…

News of the sale follows bad financial news from Best Buy last week. After the company said that revenue at comparable U.S. stores, those open at least 14 months, fell 0.9 percent during the nine-week holiday sales period that ended Jan. 4, the firm’s stock dropped 35 percent in two days. Investors were upset because Wall Street had been expecting Best Buy to post a gain of 0.7 percent at those stores. Best Buy cited the toll of deep price discounting and lower-than-expected demand for cellphones for the drop. On Tuesday, Best Buy shares were up 1.1% in morning trading.