Thursday, October 23, 2008 Shares Pummeled

Amazon reported their quarterly numbers yesterday and while those results just about met expectations it was their forecast that has thrown everyone into a tizzy. The company has brought their full year forecast (made in July) down from $20.10billion to between $18.46 - $19.46 billion. (This in itself is a ridiculously wide spread).

According to Bloomberg, over 40% of Amazon's operating profit comes in the Christmas quarter and they like other retailers are expecting a lackluster season.

Shares after trading are down 15%. Shares closed at $49.99 but are expected to open around $42.

Google Chart.

As an aside, Barnes & Noble has slipped below a market cap of $1billion.

Here is the transcript from Seeking Alpha. Those curious about why those supposed hundreds of thousands of Kindle units sold aren't impacting the numbers will remain frustrated.
Kindle selection continues to grow. Since inception, we have more than doubled the number of books, magazines, newspapers, and blogs available to be delivered wirelessly in less than one minute. Kindle titles already account for more than 10% of unit sales for books that are available in both digital and print formats. We’ve ramped up manufacturing capacity over the past 10 months and Kindles are in stock and available for immediate shipment. Kindle sales since launch have significantly exceeded our expectations. We will not introduce the new version of the Kindle until next year at the earliest.
And this: They plan to make it up in volume:

And then on the Kindle? How do you see that affecting your long-term profitability in the book segment?

Jeffrey P. Bezos Well, one thing that I think you could imagine happening over the long-term there is that the prices of books will be cheaper, so most of the books that we are offering on Kindle today are $9.99, even if they are $20 or $25 in print form. And so you can see that -- I think that probably the best way to answer your question is we would hope to sell many more units and make less money per unit but all in, have a very strong business.

So, as we are coming to believe Amazon controls pricing in the e-book world! Consumers will expect an e-Book to cost $9.99 and publishers will not be able to do any thing about it.

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