Bad News for Amazon Is Good News for Apple

There may be a reason for last week's fire sale on Amazon.com's (NASDAQ: AMZN  ) Kindle Fire.

Maybe they're just not selling.

Pacific Crest analyst Chad Bartley lowered his unit sales target for Amazon's attractively priced tablet yesterday. His supply chain checks show that Amazon is likely to sell just 6 million Kindle Fire devices this holiday quarter, well off the 8 million that he was originally targeting.

Obviously, most companies outside of Apple (NASDAQ: AAPL  ) would kill to move 6 million tablets.

Just last week, Barclays Capital analyst Raimo Lenschow slashed his target of Microsoft's (NASDAQ: MSFT  ) Surface unit sales during the current quarter from 2 million to just 700,000.

Combine both calls -- as unfair an analysis as that may be -- and you're talking about 3.3 million fewer Kindle Fire and Surface tablets being sold this quarter.

Now, shoppers seem to be spending at least as much as they did last year this holiday season, and tablets seem to be high on wish lists.

However, no one really asks for a tablet for Christmas. It's an iPad that they want, and it's what they will probably get.

Don't read into analysts souring on the Kindle Fire and Surface as a global slam on tablets. It seems as if Apple's strategy -- quickly rolling out the fourth generation of its iPad alongside the $329 iPad mini and $399 iPad 2 -- has created enough price points and feature profiles to woo shoppers that could've been swayed by Kindle Fire's low prices.

The silver lining for Amazon is a cruel one. Bartley is lowering his revenue targets for 2012 and 2013 on the downward tablet revision, but he's also propping up next year's profit target from $2.60 a share to $2.70 a share. Since Amazon is widely reported to be selling its tablets at a loss, coming up short in the near-term is a plus for the bottom line.

We'll see how this all plays out. Microsoft and Amazon are unlikely to put out actual tablet unit sales numbers once the holiday quarter is in the rearview mirror, but Apple has no problem opening up every quarter. It's easy to do that when you're winning.

Everyone knows Amazon is the big, bad wolf in the retail world right now, but at its sky-high valuation, most investors are worried it's due for a correction. We'll tell you what's driving the company's growth, and how to know when to buy and sell Amazon in our new premium report. Our report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.


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  • Report this Comment On December 19, 2012, at 8:53 PM, dwilh51183 wrote:

    APPLE'S products are just way too cool and offer great quality for children to take a chance on a cheap product. We are talking about my child's education and the IPAD offers the greatest learning experience and it is also what 99% of the major 500 largest corporations are using in the workplace.

    AAPL products are also used by almost all the schools and major colleges and universities because that's what all the college kids want. Sorry GOOG, MSFT AND AMAZON...MAYBE YOU GUYS NEED TO INVENT SOMETHING NEW ON YOUR OWN.That's what research and development money is supposed to be used for

  • Report this Comment On December 19, 2012, at 10:37 PM, tychicum wrote:

    If your begging for a sad Christmas just stick a Surface under the tree for your 13 year old daughter instead of an iPad.

    You might as well wrap up a dog terd.

  • Report this Comment On December 20, 2012, at 8:30 AM, chopchop0 wrote:

    Yeah but if you're an adult who wants something feature-rich and useful, put in an IOU under the tree for a surface Pro next year ;)

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