Amazon – Who is stupid Management or Shareholders? $AMZN

Kindle Fire: Out of the Box

Image by Brian Sawyer via Flickr

Amazon (Nasdaq:AMZN) issued numbers and some investors claim to be disappointed. Revenues are up huge but margins are down. Spending on infrastructure was huge and guess what the Kindle Fire is being sold at near break even prices. That’s break even folks not huge losses.

Normally I criticize management. But this time I’m going for a double and will criticize management and investors. Amazon is notorious for not sharing information. They play it close to the vest and keep investors in the dark. This heightens volatility. Today the stock sold of because of bad news. management could have been more forthright and prepped market expectations.

Investors on the other hand are bailing because of a poor quarter. what went wrong. Revenues are up huge. Top line gets a big check market. Margins have squeezed. The finger points to the Kindle Fire being sold in record numbers. Each Kindle Fire represents a cash flow stream. So if you get a lot of cash flow streams started that’s not so bad. As a matter of fact that is excellent.

Amazon has been viewed as a tech stock, a growth stock and a disruptor. Somewhere along the way investors were expecting earnings growth to be uninterruptible. The assumption is nonsensical. The Amazon investor will have to decide if they are momentum oriented or if they are the classic value investor. Buy ugly and sell pretty.

In any event management needs to learn how to better communicate and reduce volatility.

Times are a changing for everyone.

George Gutowski writes from a caveat emptor perspective.

Kindle Fire plays to WiFi. When will Jeff Bezos strike at Verizon and At&T $AMZN #kindlefire $VZ $T $AAPL

Image representing Jeff Bezos as depicted in C...

Image via CrunchBase

When Apple (Nasdaq:AAPL) comes out with a product Verizon (NYSE:VZ), AT&T (NYSE:T) and others scramble for allocation and hope to generate broadband usage and plan fees. Kindle is playing the Wifi route. No expensive plans supposedly. Just use Wifi either at home or in hot spots. Officially no big bills to get upset about.

As users abandon laptops and migrate to tablets the usage stays the same or so we think. Broadband still goes up because the tablet is way easier and more compelling. But the bill for internet use is separate. Psychologically the consumer does not connect the two very closely. Also carriers will not get bullied by an Apple and there will be no complicated co-branding agreements.

Until Kindle Fire becomes more established and then Jeff Bezos strikes. Right now its a game of patience.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in any stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

Kindle Fire vs iPad – vacuum cleaner wars $AAPL $AMZN #kindlefire #ipad

A Dyson DC07 upright cyclonic vacuum cleaner u...

Image via Wikipedia

OK it’s game on between Apple and Amazon. Between iPad and Kindle Fire. Everyone is focused on what they can and cannot do. We are blinded by the user experience paradigms. What you are really seeing is an old fashion war between two vacuum cleaners. The two vacuum cleaners are designed to suck cash out of a consumer’s pocket as quickly as possible. Books, music, video whatever can make a buck is what we are talking about. The cost of the devices may come down to near zero. What shopping center charges parking. They want you in with your wallets open. Be quick about it.

Eventually you will see many with both tablets. Huh. Think about it! Have you ever shopped at two different malls? Sometimes in the same day. Have you ever sent your partner to one mall and you are at another for some heavy-duty comparison shopping?

Kindle Fire and iPad will eventually need to differentiate themselves in offerings and pricing strategy. We may even view Amazon and Apple as two competing department stores just like Sears and Macy’s. 

So much for thin, light weight, compact, gorilla glass, touch screen and all the other features. No one has a long-term competitive advantage. At the end of the day will the consumer click and salivate at iPad or Kindle Fire. I can’t wait for the cyclonic features which must be coming soon. Capitalism you gotta love it.

Disclosure: George Gutowski writes from a caveat emptor perspective. I click and salivate at many on-line stores. I have no positions in any stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

Apple pride drives poor iPad pricing. Kindle Fire changes tipping point $AAPL $AMZN #kindlefire #ipad

Image representing Jeff Bezos as depicted in C...

Image via CrunchBase

Kindle Fire finally dove into the shark tank. Just remember technology eats its own babies. Amazon (Nasdaq:AMZN) and Jeff Bezos have launched the smartest device to drive sales and revenues directly into Amazon. The Kindle price points have delighted the market. Compared to iPad a lot of new users will naturally gravitate to Kindle Fire. Jeff Bezos is very smart in not getting into a PR word battle about Apple (Nasdaq:AAPL) losing its dominance. Just make the customer happy and laugh to the bank which is hopefully still solvent.

Apple is not stupid. They will monitor their sales carefully. They already have cut back the manufacturing orders. The moment iPad pricing is dropped to create more value you know the tipping point has been reached. Currently the apple game plan is to be cool with the most app’s thereby driving demand but at a high price. The price is not sustainable. If Apple tries to chase the price down it will alienate customers and signal to the world that it has it wrong.

You can imagine what the stock price will do as the energy changes from hyper-positive to hyper-negative. Market behaviours are manic-depressive and you know it’s coming.

Notice I’ve said nothing about the other tablets.

Disclosure: George Gutowski writes from a caveat emptor perspective. I own both iPhone and Kindle e-reader. I do not hold positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours. 

Will Apple annoy #iPad users to fight off #Kindle #Tablet $AAPL $AMZN

Cover of "Kindle Wireless Reading Device,...

Cover via Amazon

Seems everyone has a special secret insight into the Kindle tablet from Amazon (Nasdaq:AMZN) and how it will kick Apple’s (Nasdaq:AAPL) iPad around the block. Pretty good publicity for an unlaunched product. The price point buzz is critical. Everyone assumes Kindle will come in way lower than Apple. Everyone says Amazon has huge cash reserves and will try to bleed Apple. Everyone knows Apple has lots of cash and can take some attrition warfare.

But look at it from an iPad users stand point. You lay out some serious cash and a compelling competitor rides onto the field. Apple drops its price to counter. How many iPad purchasers will be rebated and how angry do they have to become to get the rebate. What will this do to the iPad and Apple Brands

Once Kindle forces the price down who will win the upgrade war of new and wonderful features. Amazon and Kindle have a winning track record in the marketplace. Apple has dominated because it takes an early lead and does not lose it. Apple will see the lead shrink and it is not used to fist fight.

So will they annoy the iPad customer and drop prices once Kindle has some traction or will they strike pre-emptively and signal respect for Kindle Tablet. 

Disclosure: George Gutowski writes from a caveat emptor perspective. I am anxiously awaiting the Kindle tablet before I make my final personal decision. I do not own positions in stocks mentioned in this post. I do not have any plans to initiate any new positions within the next 72 hours.

Barnes & Noble Nook Razzle Dazzle

Image representing Barnes & Noble as depicted ...

Image via CrunchBase

Barnes & Noble (BKS) rolled out the new Nook reader claiming that the inclusion of colour and aiming it partially at kids will be a marketing win. The price point does not skim the bottom of the barrel. The inclusion of colour is only a temporary advantage and will be easily matched by upgrades from competing products. Advertisers will want color to ensure their messages are more compelling.

The children’s market is compelling. You do spend money for the little ones. But it is the parent that spends. No information on how the parent is being engaged. So the children’s market may become an unfulfilled dream.

Barnes and Noble is huge in college and university text books. Students have to buy the material. The value proposition of digitizing learning materials is huge. University students will adopt technology. University students will look to save money. When will the nook play here? Significantly that is.

This is not the compelling e-reader move. So what if the heads of education in the five largest states get together and mandate digitized e-reader style text books and learning materials. The volume would compel text-book purveyors to re-purpose their material and lower costs.

William Lynch, Chief Executive Officer of Barnes & Noble said “reading anything and everything in brilliant color is the killer app…”

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.