Nasdaq: AMZN
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Buy, Sell or Hold: The Smart Money is Selling Amazon.com
I love the super deals that I get from Amazon.com (NASDAQ: AMZN). They always seem to beat the brick-and-mortar stores and I get two day-delivery for free.
It's no wonder to me that the online retail giant has ranked at the top of Foresee's E-Retailer Consumer Satisfaction index for eight straight years.
What I do have doubts about is Amazon's share price. It continues to make new highs while the company's core business is slowing and its new "growth" businesses aren't all they are cracked up to be.
With a P/E that has now reached astronomical levels, here's why the only money I'll be giving to Amazon will be what I spend on its merchandise.
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Give Me the Right Stamp of Approval and I’ll Give You Your Next 319% Profit
At one time or another, I'm sure that we've all been outraged by stories of rampant government waste - especially in areas of aerospace- and defense-related research.
But today I'm going to tell you about a NASA-related tech program that led to a big payoff. In fact, investors who knew what to look for could've turned $10,000 into $41,900 - a 319% return - in just 29 months.
I'm relating this story for a couple of reasons. It shows you why I spend so much time looking at the research that's underway in labs at both the university and national level.
And it also explains why I write to you so frequently about cutting-edge science where I believe there's a big potential payoff.
My ultimate goal, you see, is to tell you about profit opportunities like this one before they occur.
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Why the CIA and Amazon Are All Over This Quantum Computing Upstart
The CIA and the world's biggest Web retailer want to see the world of Big Computing turned upside down.
That's why they joined a $30 million investment round in a small supercomputing startup. The firm is taking a radical new approach to how these processors crunch massive amounts of data.
It's a field that is quickly turning its skeptics into true believers. Then again, cutting-edge tech like quantum computing doesn't come along every day.
No doubt, quantum computing is some pretty complex stuff. So, let me simplify it for you. At its root, quantum computing relies on the high-speed action inside atoms as well as particles of light.
The result is speeds so fast it makes your head spin.
We're talking about computers that could perform some functions millions of times faster than anything that's on the market today.
It's no wonder the nation's top spies and Amazon.com (Nasdaq: AMZN) founder Jeff Bezos want to get in on the ground floor. Though they didn't say how much each ponied up, both took part in the most recent round of financing for D Wave Systems.
In-Q-Tel, which invests in high tech that supports the CIA, and Bezos Expeditions join a growing list of D Wave investors. Other blue-chip backers include the Business Development Bank of Canada, Draper Fisher Jurvetson, and Goldman Sachs (NYSE:GS).
D Wave: Quantum Computing's Kingpin
Founded in 1999, D Wave spent its first five years in discovery mode. By that I mean the small firm was focused on coming up with novel ways to make quantum computing work and then get the patents it needed to protect the moat it was building.
That early attention to detail has clearly paid off. Today, D Wave holds 90 U.S. patents and has roughly 100 more pending around the globe.
Here's the thing. D Wave is founding a whole new sector of the computing industry while making sure it maintains a strong first-mover advantage.
After struggling for years, D Wave is now on a roll.
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Why AMZN Stock is Soaring
Amazon.com Inc. (Nasdaq: AMZN) stock is up more than 15% in midday trading, after an earnings report that predicted slowing growth and profits in Q3. So why are investors interested in a stock that will make less money - and may even post a loss?
Money Morning's Chief Investment Strategist Keith Fitz-Gerald joined Fox Business' "Varney & Co." Friday to talk about the value in Amazon.com. Keith explained how Amazon.com's Q3 outlook isn't a bad thing.
Keith also shared a stock that he sees outperforming in this economy, and talked about how the GDP numbers highlight the "mess" Washington has created for the U.S. economy.
Watch this accompanying video for Keith's full analysis.
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Does the "Showroom Effect" Spell Trouble for Amazon (Nasdaq: AMZN)?
Thanks to the "Showroom Effect," Target Corp. (NYSE: TGT) and Amazon.com Inc. (Nasdaq: AMZN) have parted ways.
That means Amazon's hot new Kindle e-reader will no longer be found on the shelves of one of the biggest U.S. chain retailers.
The "Showroom Effect" is a phenomenon in which consumers use brick-and-mortar stores to test drive certain products before purchasing them online at a lower price.
This isn't the first shot fired in the war between the world's largest online retailer and the second largest discount retailer in the United States.
The Beef with Amazon
Retailers have long complained of Amazon's unfair competitive advantage because the online retailer is exempt from charging state and local sales taxes.
Last spring, Target, along with Wal-Mart Stores Inc. (NYSE: WMT), Best Buy Co. Inc. (NYSE: BBY), The Home Depot Inc. (NYSE: HD), and other retailers threw their collective weight behind the Alliance for Main Street Fairness, a coalition that is leading efforts to change sales-tax laws in more than a dozen states, including Texas and California.
But the sales tax gap is just part of the problem.
During last year's holiday shopping season, Amazon offered 5% discounts up to $5 to "show-rooming" consumers who used the online giant's Price Check mobile app in a physical store-in essence, encouraging the Showroom Effect.
In response, Target sent a letter to its suppliers urging them to help combat the Showroom Effect, either by delivering more in-store exclusive products, or by helping to them to match the prices of Target's online rivals, including Amazon, TigerDirect, Overstock.com Inc. (NasdaqGM: OSTK), and eBay Inc. (NasdaqGS: EBAY).
Even still, retailers like Target have other issues with online competitors like Amazon - such as what happens after the sale.
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Will the Microsoft (Nasdaq: MSFT) Deal with Barnes & Noble Work?
The story behind Microsoft's (Nasdaq: MSFT) $300 million investment in Barnes and Noble's (NYSE: BKS) Nook is an easy read: Both companies win with the deal.
The duo is pairing to create a new subsidiary, with Microsoft taking a 17.6% stake. Microsoft will invest an additional $305 million over the next five years.
The deal gives the tech giant a long-desired grip in the business of e-books and college textbooks, which are moving to electronic distribution.
Microsoft will highlight a Nook app later this year on its Windows 8-powered tablets. This will let it compete against Apple Inc.'s (Nasdaq: AAPL) iPad and Amazon.com Inc.'s (Nasdaq: AMZN) Kindle Fire.
"It's a good strategic deal," Sid Parakh, an analyst at fund firm McAdams Wright Ragen, told Reuters. "It gets Microsoft in the game for e-readers, and gives them access to a market that has been growing nicely and they've basically sat out of. It also makes Windows 8 a more compelling platform from an e-readers perspective."
Microsoft Moves To Mobile
Monday's deal is a new chapter for both companies, especially Microsoft.
Microsoft has been testing the waters of the e-book field but has yet to really get its feet wet. Since it launched e-book software in 2000, it has never been able to amass a significant library. In fact, this software will be shelved on Aug. 30.
"The shift to digital is putting the world's libraries and newsstands in the palm of every person's hand, and is the beginning of a journey that will impact how people read, interact with, and enjoy new forms of content," Microsoft President Andy Lees said in a statement.
Microsoft has been overhauling its approach to mobile, which has taken a back seat to Apple's iOS and Google Inc.'s (Nasdaq: GOOG) Android. This new deal may just take a bite out of Apple or have Google ogling.
The move could be a game changer for Windows 8, as well as the Nook.
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Amazon.com Inc. (NASDAQ: AMZN) Will Get Burned by the Fire
Amazon.com, Inc. (NASDAQ: AMZN) has lost its focus.
The pioneer of clicks for sales has decided it wants to be the next Apple Inc. (NASDAQ: AAPL).
But there's a big difference between selling other people's products for a profit on a Website and becoming the provider of custom hardware solutions for retail buyers.
This transition isn't going to end well.
The Amazon Fire is a chopped-down tablet designed to compete with the iPad. There is a world of difference between the two products and where they are in their lifecycles.
Amazon is selling its Fire tablet for half the price of the iPad, which looks great on the surface. When you compare exactly what each product brings to the table, though, it's obvious the iPad 3 (due in mid-March) will douse the Fire.
The iPad 3 will have a slew of hardware enhancements over the last iPad, and while iPad 2 was a generational upgrade over the original, it still caught the world by surprise.
The tablet market has tried before to build a better-valued product to compete with the iPad, which is where the Amazon Fire comes into play.
The reality is that the Fire is a first-generation equivalent to the iPad but with smaller physical size and limited features.
The Fire is easily two years behind the curve in the Apple-equivalent build cycle of features for same purchase price. Two-year-old technology is an eternity when you're competing against the best product designers on the planet.
This is important because the bar continues to rise, and Apple can start to sell a similar product with a premium feature set at a slight markup, destroying Fire's niche.
This weakness is a terminal issue in my opinion.
When you think about it, Amazon is subsidizing the construction and sale of the Fire, with estimated losses on each unit, as it deploys them around the world to users.
This makes me wonder when the pain of the Fire will cause Amazon to adopt a less volatile business plan.
So it's time to sell Amazon.com Inc. (NASDAQ: AMZN) (**). The Fire will continue to burn investors in Amazon for quarters.
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Amazon.com Inc. (Nasdaq: AMZN): Growth Phase Pinches Profits, but Investors Should Ride it Out
Internet retailer Amazon.com Inc. (Nasdaq: AMZN) reported soaring revenue and limited profits today (Tuesday) - but investors shouldn't be discouraged by the low earnings as the company invests in future growth.
Amazon.com reported net income of $177 million, or 38 cents a share, compared to net income of $416 million, or 91 cents a share, for the same period the previous year - a 58% plunge. Revenue jumped to $17.4 billion, a 34% rise from the $12.95 billion in 2010's fourth quarter.
While revenue fell slightly short of Wall Street's expectations, earnings were more than double the predicted 17 cents a share. Amazon.com had given fourth-quarter guidance with a revenue range of $16.5 billion to $18.7 billion.
Amazon.com revenue got a healthy boost from sales of Kindle Fire, the tablet and e-reader running Goolge Inc.'s (Nasdaq: GOOG) Android software. Total sales of the Kindle Fire and other e-reader devices increased 177% in the nine-week 2011 holiday season compared to the same period in 2010. The company reported that Kindle Fire is the No. 1 selling product available on Amazon.com since it was introduced in November.
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Amazon Kindle Tablet Will Plump Revenue and Disrupt Market
A rumored Amazon Inc. (Nasdaq: AMZN) Kindle Tablet will deliver billions of dollars in fresh revenue next year.
In addition to its hardware sales, the tablet will provide a quick and convenient way for Amazon to capture a bigger chunk of the digital media market and allow customers to buy any of its millions of offerings from almost anywhere.
The 7-inch tablet is expected to appear within the next month or so and cost just $250. Such a low price from a trusted brand like Amazon will disrupt the entire tablet market.
"A proprietary tablet would allow Amazon to widen itscompetitive moat, improve consumer experience and benefit from the rapid growth in mobile usage," Jefferies & Co.'s (NYSE: JEF) Youssef Squali wrote in a report.
Although analysts expect Amazon to make little profit from the tablet itself, its potential for selling more of its digital wares such as e-books, movies, music and Google Inc. (Nasdaq: GOOG) Android apps is boundless.
The Kindle e-reader shows how hardware can drive media sales. It has helped Amazon capture 90% of the e-book market.
The Kindle e-reader will account for 9.9% of Amazon's total revenue next year, just five years after its debut, according to Citigroup Inc. (NYSE: C) analyst Mark Mahaney. Mahaney estimates about half of that revenue, $6.1 billion, will be from sales of the device, with the other half from e-books.
An Amazon Kindle Tablet will open up multiple digital avenues of growth.
Take online video sales, for example. Amazon has just 4.2% of that market, well behind the 65.48% share of Apple Inc.'s (Nasdaq: AAPL) iTunes Store.
In terms of additional revenue, the Kindle tablet could quickly rival that of the e-reader.
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