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Amazon earnings: selling a tablet at $50 less than cost is…
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not going to bode well for Jan earnings release. Everyone they sell could be the death of a thousand ( or a couple of million) knives. Profit this qtr down: get this, 73% for a year ago. A current P/E of 100 and PEG of 3.8 is a high price to pay for a company that has made a strategic decision to compete in the tablet market by sending each customer $50 with the purchase of a tablet. I knew the tablet decision would hurt AMZN but way underestimated by how much.
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Do you have a link that documents the $50 number?
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We don’t know, though you are certainly justified in suspecting, that the Kindle Fire is a loss leader based on the $199 price.
AMZN is no longer a WS darling. Scrutiny will increase. Creates risky, but fun, opportunities for some of us traders.
Mercel? Care to join us?
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The Summer of AAPL is here. Enjoy it (responsibly) while it lasts.
AFB Night Owl Team™
Thanks, Steve. -
Do you have a link that documents the $50 number?
Second from last paragraph
http://www.bizjournals.com/seattle/news/2011/10/25/amazon-profit-drops-73-low-kindle.html?ana=yfcpcFrank
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Do you have a link that documents the $50 number?
Here is another: http://www.pcmag.com/article2/0,2817,2393835,00.asp#fbid=jvaN6iIKtLZ
Other estimates claim they loose 10%. Obviously even selling at cost would equal 0 profit and that will drag on all positive margins. The more they sell the more it hurts so to speak. Without going on a rant GOOGi is doing exactly the same thing with Andriod but have the massive profits of their Adsense search/advertising product to subside the Android team hence the 76% of revenue from advertising and 4% for everything else.
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So does anyone want to support or rebut the idea that money moving out of NFLX and/or AMZN will move to AAPL? Thoughts?
Frank
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So does anyone want to support or rebut the idea that money moving out of NFLX and/or AMZN will move to AAPL? Thoughts?
Frank
Well I’m historically a long shareholder in AAPL, buying and selling, but essentially long. I’m still long AAPL, but I was pissed off at Amazon’s P/E of 100+. After I saw NetFlix get chopped I decided to short Amazon right before market close today….lucky me.
But the question is now - when to cover the Amazon short.
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So does anyone want to support or rebut the idea that money moving out of NFLX and/or AMZN will move to AAPL? Thoughts?
Frank
Well I’m historically a long shareholder in AAPL, buying and selling, but essentially long. I’m still long AAPL, but I was pissed off at Amazon’s P/E of 100+. After I saw NetFlix get chopped I decided to short Amazon right before market close today….lucky me.
But the question is now - when to cover the Amazon short.
My .02: I think the markets iabout to correct and a stock with a 100PE, lower margins and lower guidance has a ways to fall. No where near as bad as NFLX (given the measure RH had to go to to cover his off book obligations) but another $20 would not be surprising
Frank -
I may be looking at another bear put spread (because I don’t know any better) on AMZN. Probably farther out than a month or two.
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The Summer of AAPL is here. Enjoy it (responsibly) while it lasts.
AFB Night Owl Team™
Thanks, Steve. -
i bought some 2014 puts (strike 180) last Friday…planning to keep them another couple of months….
I really do not understand how they can only drop 10% with such a miss and a guidance that looks like it has been done by a 5 year old…even after the AH drop it is still one of the most overvalued companies out there…
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An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.
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i bought some 2014 puts (strike 180) last Friday…planning to keep them another couple of months….
I really do not understand how they can only drop 10% with such a miss and a guidance that looks like it has been done by a 5 year old…even after the AH drop it is still one of the most overvalued companies out there…
With a rich PE OF 20, it should be 40$ stock. Its a retail store after all.
Is the conviction out here that they can grow that quickly? I could never understand this one. -
i bought some 2014 puts (strike 180) last Friday…planning to keep them another couple of months….
I really do not understand how they can only drop 10% with such a miss and a guidance that looks like it has been done by a 5 year old…even after the AH drop it is still one of the most overvalued companies out there…
Sorry what I meant was another $20 during regular trading (over time) at least IN ADDITION TO the $20+ in AH (I had just looked at the AH numbers when I wrote the post). Yes I would not be surprised to see a $40 drop some time in this qtr.
Frank
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less than 10% down… i just don’t get it….:-(
imagine that Apple came out with results and guidance like this….
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An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.
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Blodgett’s Amazon shill piece is absolutely disgusting. This JA is the biggest F’ing shill/crook going:
http://finance.yahoo.com/blogs/daily-ticker/dear-america-time-big-thank-amazon-141036276.html;_ylt=AqNX._dJZUO09SRR5xe0FMS7YWsA;_ylu=X3oDMTFjNzM2aXUzBHBvcwM0BHNlYwNGUERhaWx5VGlja2VyQmxvZwRzbGsDaXRzdGltZXRvc2F5 -
I’ve held back as long as I can. Somebody’s got to say it.
Why would it be a surprise that Amazon lost money when they had a FIRE SALE?
[there I feel better now]
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“According to analysts”. First and foremost, even if the analysts are correct, there is such a thing as a “cost curve” that should trend down for a product like this when enough are produced.
The most interesting thing about K-Fire in my view is the Prime trial accompanying it. Converted trials are an $80 annuity with a loyalty lock-in.
All that said, AMZN with a 100+ P/E is way pricey. K-Fire is a bold move into high margin digital product, and maybe they grow their business quicker than the stock price appreciates. I’d be more comfortable with a P/E around 50, because they face a near certain sales tax risk to their core physical distribution business within a year.
