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kennyc · 10-17-2011, 09:04 PM

Amazon Kindle Fire Sale in IPad Challenge Narrows Margins

Amazon.com Inc. (AMZN)’s profit margins, already at a five-year low last quarter, are set to narrow next year as the world’s largest online retailer sells its new tablet computer for half the price of the iPad.

The Kindle Fire will go on sale next month for as little as $199, compared with $499 for the cheapest tablet from Apple Inc. (AAPL) The lower price will help Amazon sell 4.5 million Kindle Fires in the fourth quarter, according to Barclays Plc, topping the 3.3 million units Apple reported for iPad’s debut quarter. It also means Seattle-based Amazon loses about $10 on each tablet, according to IHS Inc.

“It is possible that in 2012 you’ll have a quarter with negative operating margins,” said Ben Schachter, an analyst at Macquarie Capital in New York. “That typically is a disaster scenario. It’s phenomenal to have this revenue growth, but at some point you want to see them make money on it.”

Chief Executive Officer Jeff Bezos is counting on sales of music, books, movies and merchandise on the tablet to make up for money lost on the device. The Kindle Fire, available Nov. 15, has a 7-inch display, smaller than the iPad’s 9.7-inch screen, Amazon said at a Sept. 28 event in New York. The device will run on Google Inc.’s Android software, have a dual-core processor and offer Wi-Fi connectivity, the company said.

more here:
http://www.bloomberg.com/news/2011-1...gins-tech.html

10-17-2011, 09:04 PM	#1
kennyc The Dank Side of the Moon Posts: 35,872 Karma: 118716293 Join Date: Sep 2009 Location: Denver, CO Device: Kindle2; Kindle Fire	Amazon Kindle Fire Sale in IPad Challenge Narrows Margins Amazon Kindle Fire Sale in IPad Challenge Narrows Margins Amazon.com Inc. (AMZN)’s profit margins, already at a five-year low last quarter, are set to narrow next year as the world’s largest online retailer sells its new tablet computer for half the price of the iPad. The Kindle Fire will go on sale next month for as little as $199, compared with $499 for the cheapest tablet from Apple Inc. (AAPL) The lower price will help Amazon sell 4.5 million Kindle Fires in the fourth quarter, according to Barclays Plc, topping the 3.3 million units Apple reported for iPad’s debut quarter. It also means Seattle-based Amazon loses about $10 on each tablet, according to IHS Inc. “It is possible that in 2012 you’ll have a quarter with negative operating margins,” said Ben Schachter, an analyst at Macquarie Capital in New York. “That typically is a disaster scenario. It’s phenomenal to have this revenue growth, but at some point you want to see them make money on it.” Chief Executive Officer Jeff Bezos is counting on sales of music, books, movies and merchandise on the tablet to make up for money lost on the device. The Kindle Fire, available Nov. 15, has a 7-inch display, smaller than the iPad’s 9.7-inch screen, Amazon said at a Sept. 28 event in New York. The device will run on Google Inc.’s Android software, have a dual-core processor and offer Wi-Fi connectivity, the company said. more here: http://www.bloomberg.com/news/2011-1...gins-tech.html