Amazon Discounts Kindle Fire Evil Genius or Desperate Stupidity $AMZN #kindle $AAPL

Image representing Amazon as depicted in Crunc...

Image via CrunchBase

Amazon (Nasdaq:AMZN) has dropped its Kindle Fire retail price by $50; dropping to some $249. Some view they may be under guidance as they are leaving $50 on the table. But as you head into the short frenetic end of the Christmas season a price drop will improve sales and long-term customer loyalty. The main goal of a tablet is to suck money out of your bank account into theirs. So the supposed $50 price drop will be more than compensated by increased sustainable revenues.

The money flow action is 0.96. Marginally negative but nothing to worry about. Investors are starting to over focus on the short-term issues. Yes Amazon is in a strategic fight for on-line retail dominance.

But watch for the following possible moves which can change perceptions to the better.

  1. Amazon can start paying a dividend and signal they believe their cash flow is stable and sustainable.
  2. Amazon can borrow a billion dollars long-term at low-interest rates and lock in positive spreads as rates start to climb.

The big moves will be with capital structure not tactical pricing issues for key products.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

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 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.