Next of Kindle

Amazon.com (Nasdaq: AMZN  ) has been tight-lipped about the performance of its revolutionary Kindle e-book reader. I'm guessing that hard numbers are just around the corner.

"Amazon officials gave McAdams Wright Ragen analysts the impression that high-end estimates on Kindle sales reported by TechCrunch and a Citigroup analyst are not reasonable," a Seattle Post-Intelligencer blog entry revealed over the weekend.

The newspaper received an email from McAdams Wright Ragen analyst Tim Bueneman after meeting with Amazon management, also confirming that "several new, improved versions of the Kindle in the works."

Speculation has mounted on both sides, and Amazon has generally chosen to stay out of the chatter. Citi analyst Mark Mahaney figured that the world's leading online retailer had sold just 10,000 to 30,000 Kindles in a springtime note. However, the bullish Mahaney maintained that the Kindle could grow to ring up as much as $750 million in sales by 2010. A more upbeat TechCrunch channel check this summer was followed by Mahaney's pegging the Kindle as a $1 billion product line for Amazon come 2010.

Euphoria is the new pessimism, and that is apparently troublesome at Amazon if it's telegraphing caution. We don't know what gave the analysts the impression that the more bullish analyst notes lately are unreasonable. Amazon would be in a bind with the SEC under selective disclosure if it was leaking sales data to a privileged firm. Never heard of McAdams Wright Ragen? It's not a household name, but the company is based out of Amazon's home turf of Seattle. I would trust the local pulse here.

All roads ultimately lead to Amazon's opening up more. I have been skewering Amazon for months on its decision to keep its Kindle data close to its vest. Now that move is starting to bite back, with mixed signals that may find the company keeping from disclosing important information to everyone at the same time.

Amazon needs to do the same thing it did in the past with hot Harry Potter reorders: Put up a counter on its site tallying the Kindle sales. Let buyers get in on the early-adopter excitement. Let analysts, investors, and the curious come to their conclusions once they are presented with hard data.

Why wait? With expectations of "improved versions of the Kindle" on the way, savvy shoppers will hold back, but not even rival Sony (NYSE: SNE  ) with its perfectly adequate Sony Reader will make a dent here. It's not as if booksellers such as  Borders (NYSE: BGP  ) , Barnes & Noble (NYSE: BKS  ) , and Books-a-Million (Nasdaq: BAMM  ) can battle Amazon, either.

There is no harm in putting out as much information as possible at a time of rampant misinformation. That's what Amazon would do if it had another Potter book to sell or a report on holiday shopping trends to spit out. When analysts are arriving at different conclusions after talking to Amazon itself, it owes shareholders as much.

Other page-turners in the Kindle saga:

Borders Group is a Motley Fool Inside Value selection. Amazon.com is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz has been shopping online for about as long as Amazon.com has been in business. He owns a Kindle but no shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (1)

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  • Report this Comment On August 25, 2008, at 12:29 PM, jjdonov wrote:

    As a shareholder in both C and AMZN, I felt it was very irresponsible and unprofessional to derive numbers based on what amounts to nothing more than postings on the internet.

    They are obviously way out of line

    I wrote to Mark over the weekend and received the following response.

    It seems the MO is to publish numbers now- for whatever reason- and admit mistake later.

    It was additionally learned that AMZN insiders were busy dumping large amounts of shares the past couple of weeks as well

    ---

    From Mark Mahaney:

    "We did our own analysis and looked at several different sources. We talked with amzn but they wouldn't comment on any specific estimates.

    Whatever numbers eventually get reported, we'll acknowledge whether our estimates were too high, too low, or reasonably accurate."

  • Report this Comment On August 25, 2008, at 1:04 PM, 500E wrote:

    So, Amazon evidently did talk to McAdams Wright Ragen analyst Tim Bueneman about Kindle estimates, and suggests they would have talked to other analysts about Kindle numbers, given the opportunity. But Citigroup analyst Mark Mahaney says this is not true, that he tried to get Amazon to comment on his estimates, but that Amazon refused.

    One of them is lying.

    Either way, it adds up to selective disclosure on the part of Amazon.

  • Report this Comment On August 26, 2008, at 6:40 AM, andrys1 wrote:

    The Kindle would probably sell even faster if they didn't minimize its 24/7 Sprint EV-DO (fast) wireless capability using a very basic browser that is not time- or access-charged to the user (at the moment). I think iPhone charges about $60/mo. for that?

    I most like the ability to search your entire library for a keyword, and the default Oxford American dictionary to look up a name on the current line w/o losing one's place is very useful.

    I can quickly-autodownload NYTimes Latest News (99c/month). BBC News and MSNBC News online are accessible in Kindle format for free (bookmarked in the Kindle before you get it).

    The $360 is said to make up for having wireless access 24/7 (cell-phone style and accessible almost anywhere) with this but not charging the user for that wireless access. I think the iPhone can be $60/mo ?

    I also subscribe to Slate which gives me daily summaries of news from all the large newspapers and magazines while linking me to more detailed stories on the web, which I can then access pretty quickly if the page is mainly text and I want to know more.

    But if you like to read, outside the house, it's great to have a full library with you which you can read according to mood, and it remembers which page you were last on.

    Re the new textbook-related interest, you can highlight passages and make e-notes with the current Kindle. Ask to see these, and they're shown to you in sequence and you can click on the one you want.

    Most people skimming product info won't know this, as anything besides e-book reading is not highlighted in the Amazon ads.

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