Thursday, January 28, 2010

Amidst a sea of red, Amazon is up (AMZN, AAPL)

While the market is getting trounced today - especially tech shares - Amazon is a lonely positive name, trading +1.6%. It's likely due to yesterday's over-reaction to the Apple event, and partly in anticipation of big earnings results this afternoon.

Collins Stewart estimates that Amazon's kindle - the product under direct assault from Apple's new product offer - will amount to about a $1billion in revenue this year, and $250million in gross profit. Take the company average share of operating expenses applied to this gross profit, and I'd estimate Kindle-related earnings per share are about 10cents, out of 2010's full year estimate for 2.60 for Amazon. Small change, even if sales form Kindle evaporated completely.

Amazon reports tonight, we'll see if there is an inordinate amount of Q&A on this subject.

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