I think they are hiding Kindle sales because they are not selling as many as the estimates that are out there. This article mentioned an estimate of 6 million Kindle Fire sales. At $200 each, that is $1.2 billion. The ereader Kindles I would estimate at 1 million at $100 each on average would add another $100 million in revenue. So, a total of $1.3 billion in Kindle revenue.
Total revenue was $17.43 billion. So, 7.5% of total revenue was Kindle sales? I find that hard to believe. Amazon sells lots of other stuff.
If my numbers are off, then feel free to provide your estimates.
I think that's way off.
Start with what we know. Amazon said that they were selling 1 M Kindles OF ALL TYPES per week during the weeks before Christmas. That means that in the 6 weeks after the Kindle Fire launch, they sold about 6 M Kindles.
How many were Fires? There's no direct evidence, but we can speculate based on their Kindle growth rate. They claimed that total Kindle sales were up 177% last quarter (that is, 2011 sales were 277% of 2010 sales). Let's take the two extremes;
1. Assume that the older Kindle sales were unchanged. That is, ALL of the increased sales were from the Fire. That would mean that 64% of the total Kindle sales were Fire (177/277) and 36% were DX, etc. That would put Kindle Fire sales at 3.8 M (64% of 6 M).
2. We know that iPad sales were up 111% from the previous year last quarter. If Amazon's existing product sales were up by the sam 111%, then Kindle Fire sales were 66% of last year's figures. At this extreme, Fire was 24% of the total (66/277) or 1.4 M units.
So we can put the Kindle Fire unit sales somewhere between 1.4 and 3.8 M units. I predicted last week that the number would be between 2 and 3 M - and that's pretty reasonable given the few facts that we know. Call it 2.5 M at $200, so total revenues for the Fire were about $500 M. At the extremes, total Fire revenues were between $280 M and $760 M. And that's not counting returns if they were significant after Christmas.
Now, let's talk about losses. Estimates for losses have ranged from $5 to $10 per unit all the way up to $50 per unit on materials only. If materials losses were $50, total loss per device (including labor, overhead, quality cost, etc) would have been at least $75. Using the above estimate of 2.5 M units sold, that's $12.5 M losses at the low end up to $175 M on the high end. Compare that to their net income of $177 M. Without losses from the Fire, their net income would have been between 5% and 100% higher than it was. I really don't see any way to narrow it down further than that with the available evidence.
Some of us predicted this (and take no joy in it).
This is just getting started. They'll probably have to pull or scale back Fire at some point.
hi folks
I hope they find a way to fix things - with or without the fire. Amazon is still my favorite place to buy things online and I would hate to see a merketplace without their pricing pressure.
As a fork, when you do a product search, the Fire does not use Google but goes through Amazon's search catalog first. You can get everything from RAM chips, resistors, monitors, books, generators and cars through Amazon. This does two things:
1) It substantially lowers Amazon's bill they get from Google every month.
2) It targets more sales of all retail items to Amazon and their affiliates.
Amazon doesn't get any monthly bills from Google.
Advertisers pay Google directly for views and clickthroughs.
I hope they find a way to fix things - with or without the fire. Amazon is still my favorite place to buy things online and I would hate to see a merketplace without their pricing pressure.
Amazon (the company) will do just fine and serve your needs for a very long time. AMZN (the stock) has some serious correction to do.
Dont confuse revenue with profit. If you turn the statement into a profit comparison then lets compare low long it would take Apple to lose as much money as Amazon lost last quarter?
He didn't. Apple's profit for the quarter was $13 B - or about $140 M per day.
Amazon's profit for the quarter was $177 M.
For revenues, the ratio is obviously different - it took Apple about a month to have as much revenue as Amazon did for the entire quarter. But given the huge differences in their business, that's not a very useful comparison.
Advertisers pay Google directly for views and clickthroughs.
Thompson
Amazon is a major advertiser on Google. There are lots of queries that result in an Amazon ad at the top of the Google search results. That cannot be cheap.
Ignoring their lackluster profits completely I'm amazed that Amazon's Kindle category is only up 177% YoY. That's all their eReaders with a new touchscreen version and new lower priced for the entry level model AND their media tablet. That's just pathetic when you've added so much to that oddly grouped category. For comparison the iPad was up 111% YoY and it had been out 6-9 months so it wasn't a new product added to the product category like with the Kindle Fire.
The point is not whether they make money. It is that they are roughly, vaguely, somehow ANDROID! Android tablets are now, what, 40% of the market? The BS talking point is all that matters to some.
Except that the Fire is not an Android tablet. Although, now, I don't think there is a market for Android tablets.
Amazon is a major advertiser on Google. They are lots of queries that result in an Amazon ad at the top of the Google search results. That cannot be cheap.
This is just getting started. They'll probably have to pull or scale back Fire at some point.
Why? They aim is to clearly build a very large userbase. It is standard MO for Amazon. Quickly and aggressively expand into new markets. Amazon frequently takes a loss on a new market inorder to attract customers.
The more people with Fires the more people who will be using Amazon for buying books, movies, music and apps. This helps to lock people into Amazon resulting in even more purchases over the long term. Furthermore, these people are then more likely to buy other goods on Amazon. Personally I wouldn't be surprised if they release a kindle phone and set top box in order to further lock consumers into Amazon services.
Their business model is different from Apple. Apple's end goal is to sell more hardware. Amazon want to sell you anything you could possibly want to buy.
Start with what we know. Amazon said that they were selling 1 M Kindles OF ALL TYPES per week during the weeks before Christmas. That means that in the 6 weeks after the Kindle Fire launch, they sold about 6 M Kindles.
How many were Fires? There's no direct evidence, but we can speculate based on their Kindle growth rate. They claimed that total Kindle sales were up 177% last quarter (that is, 2011 sales were 277% of 2010 sales). Let's take the two extremes;
1. Assume that the older Kindle sales were unchanged. That is, ALL of the increased sales were from the Fire. That would mean that 64% of the total Kindle sales were Fire (177/277) and 36% were DX, etc. That would put Kindle Fire sales at 3.8 M (64% of 6 M).
2. We know that iPad sales were up 111% from the previous year last quarter. If Amazon's existing product sales were up by the sam 111%, then Kindle Fire sales were 66% of last year's figures. At this extreme, Fire was 24% of the total (66/277) or 1.4 M units.
So we can put the Kindle Fire unit sales somewhere between 1.4 and 3.8 M units. I predicted last week that the number would be between 2 and 3 M - and that's pretty reasonable given the few facts that we know. Call it 2.5 M at $200, so total revenues for the Fire were about $500 M. At the extremes, total Fire revenues were between $280 M and $760 M. And that's not counting returns if they were significant after Christmas.
Now, let's talk about losses. Estimates for losses have ranged from $5 to $10 per unit all the way up to $50 per unit on materials only. If materials losses were $50, total loss per device (including labor, overhead, quality cost, etc) would have been at least $75. Using the above estimate of 2.5 M units sold, that's $12.5 M losses at the low end up to $175 M on the high end. Compare that to their net income of $177 M. Without losses from the Fire, their net income would have been between 5% and 100% higher than it was. I really don't see any way to narrow it down further than that with the available evidence.
Really good analysis. The bottom line though is that $50MM in losses compared to what it did in advertising value and raising brand awareness during the holiday shopping season tends to make me think that this was a beautiful execution strategy on Amazon's part. Kindle Fire really isn't even a blip on the radar in practical terms.
Start with what we know. Amazon said that they were selling 1 M Kindles OF ALL TYPES per week during the weeks before Christmas. That means that in the 6 weeks after the Kindle Fire launch, they sold about 6 M Kindles.
How many were Fires? There's no direct evidence, but we can speculate based on their Kindle growth rate. They claimed that total Kindle sales were up 177% last quarter (that is, 2011 sales were 277% of 2010 sales). Let's take the two extremes;
1. Assume that the older Kindle sales were unchanged. That is, ALL of the increased sales were from the Fire. That would mean that 64% of the total Kindle sales were Fire (177/277) and 36% were DX, etc. That would put Kindle Fire sales at 3.8 M (64% of 6 M).
2. We know that iPad sales were up 111% from the previous year last quarter. If Amazon's existing product sales were up by the sam 111%, then Kindle Fire sales were 66% of last year's figures. At this extreme, Fire was 24% of the total (66/277) or 1.4 M units.
So we can put the Kindle Fire unit sales somewhere between 1.4 and 3.8 M units. I predicted last week that the number would be between 2 and 3 M - and that's pretty reasonable given the few facts that we know. Call it 2.5 M at $200, so total revenues for the Fire were about $500 M. At the extremes, total Fire revenues were between $280 M and $760 M. And that's not counting returns if they were significant after Christmas.
Now, let's talk about losses. Estimates for losses have ranged from $5 to $10 per unit all the way up to $50 per unit on materials only. If materials losses were $50, total loss per device (including labor, overhead, quality cost, etc) would have been at least $75. Using the above estimate of 2.5 M units sold, that's $12.5 M losses at the low end up to $175 M on the high end. Compare that to their net income of $177 M. Without losses from the Fire, their net income would have been between 5% and 100% higher than it was. I really don't see any way to narrow it down further than that with the available evidence.
That's a very reasonable breakdown... Without actual numbers it makes more sense than anything I've seen.
The investments in physical plants/warehouses is a CAPEX expense (cash flow) and does not hit the income statement. Only depreciation impacts earnings. And, Amazon is going to have A LOT of depreciation hitting its books in the near future
Stock buybacks also do not hit the income statement. They are a use of cash funds and hit Cash Flows (under Investing Activities)
Last, $.38 per share per quarter would generate a 130 PE ratio over the course of a year @ the current $195 stock price (an expansion of the 102 they are at today). A PE of 130 vs. Apple's PE of 13
Amazon has to become 10X more profitable just to justify their current market cap. Yeah, good luck with that
thanks for explaining some accounting 101 to kresh.
This was hardly a miss. Amazon managed a $0.38 per share earnings, crushing the street's estimste of $0.17.
Wow. Talk about putting lipstick on a pig! A year ago, Amaazon's eatnings were 91 cents a share. And you're BRAGGING about the fact that, a year later, they earned two-fifths of that? "Crushing street estimates"? Since when has the street had the ability to make decent estimates? And which particular "street" person are we talking about? The bag lady on the corner?
But PE doesn't work that way. It uses EPS over the last four quarters, which is a big difference for a cyclical company like Amazon. And I wonder if you were saying the same thing about AAPL when that stock's PE was over 100.
And market cap never needs to be "justified." It is what ever the market says it is.
I understand PE is based four quarters of results. I was projecting on an annualized basis
I would argue that the Holiday Q4 should have been Amazon's shining quarter - their highest profits. Like any other retailer. If anything, the PE has a lot of downside to the 130 above as revenues come down in future quarters to reflect seasonality
I agree - ultimately a company's worth and market cap is simply what investors are willing to pay. Amazon has done a very good job convincing investors of their plan. I simply do not believe this mirage is going to last much longer
Actually, this shows that Apple now has real competition and will soon be in second place for tablet sales. By this time next year Samsung and Amazon will be selling 3 tablets for every one that Apple sells.
</slappy>
How do you know. Amazon has never said how many they sold. Any numbers you've read anywhere are MADE UP [see the definition of "estimate"]. Even the title of this article [Kindle sales nearly triple] is comparing last years estimates with this years.
Comments
I think they are hiding Kindle sales because they are not selling as many as the estimates that are out there. This article mentioned an estimate of 6 million Kindle Fire sales. At $200 each, that is $1.2 billion. The ereader Kindles I would estimate at 1 million at $100 each on average would add another $100 million in revenue. So, a total of $1.3 billion in Kindle revenue.
Total revenue was $17.43 billion. So, 7.5% of total revenue was Kindle sales? I find that hard to believe. Amazon sells lots of other stuff.
If my numbers are off, then feel free to provide your estimates.
I think that's way off.
Start with what we know. Amazon said that they were selling 1 M Kindles OF ALL TYPES per week during the weeks before Christmas. That means that in the 6 weeks after the Kindle Fire launch, they sold about 6 M Kindles.
How many were Fires? There's no direct evidence, but we can speculate based on their Kindle growth rate. They claimed that total Kindle sales were up 177% last quarter (that is, 2011 sales were 277% of 2010 sales). Let's take the two extremes;
1. Assume that the older Kindle sales were unchanged. That is, ALL of the increased sales were from the Fire. That would mean that 64% of the total Kindle sales were Fire (177/277) and 36% were DX, etc. That would put Kindle Fire sales at 3.8 M (64% of 6 M).
2. We know that iPad sales were up 111% from the previous year last quarter. If Amazon's existing product sales were up by the sam 111%, then Kindle Fire sales were 66% of last year's figures. At this extreme, Fire was 24% of the total (66/277) or 1.4 M units.
So we can put the Kindle Fire unit sales somewhere between 1.4 and 3.8 M units. I predicted last week that the number would be between 2 and 3 M - and that's pretty reasonable given the few facts that we know. Call it 2.5 M at $200, so total revenues for the Fire were about $500 M. At the extremes, total Fire revenues were between $280 M and $760 M. And that's not counting returns if they were significant after Christmas.
Now, let's talk about losses. Estimates for losses have ranged from $5 to $10 per unit all the way up to $50 per unit on materials only. If materials losses were $50, total loss per device (including labor, overhead, quality cost, etc) would have been at least $75. Using the above estimate of 2.5 M units sold, that's $12.5 M losses at the low end up to $175 M on the high end. Compare that to their net income of $177 M. Without losses from the Fire, their net income would have been between 5% and 100% higher than it was. I really don't see any way to narrow it down further than that with the available evidence.
And market cap never needs to be "justified."
That has to be the strangest bit of financial 'wisdom' I've heard in a long while.
When Amazon makes a phone, they're going to call it the Flint, aren't they?
No, they'll make two phones, the Flint being the high end and the Tinder being the low end. Both with 4.5" screens?
Some of us predicted this (and take no joy in it).
This is just getting started. They'll probably have to pull or scale back Fire at some point.
hi folks
I hope they find a way to fix things - with or without the fire. Amazon is still my favorite place to buy things online and I would hate to see a merketplace without their pricing pressure.
Dont confuse revenue with profit.
Care to explain your math? Do you know what Apple's profit was in the most recent quarter?
As a fork, when you do a product search, the Fire does not use Google but goes through Amazon's search catalog first. You can get everything from RAM chips, resistors, monitors, books, generators and cars through Amazon. This does two things:
1) It substantially lowers Amazon's bill they get from Google every month.
2) It targets more sales of all retail items to Amazon and their affiliates.
Amazon doesn't get any monthly bills from Google.
Advertisers pay Google directly for views and clickthroughs.
Thompson
hi folks
I hope they find a way to fix things - with or without the fire. Amazon is still my favorite place to buy things online and I would hate to see a merketplace without their pricing pressure.
Amazon (the company) will do just fine and serve your needs for a very long time. AMZN (the stock) has some serious correction to do.
Thompson
Dont confuse revenue with profit. If you turn the statement into a profit comparison then lets compare low long it would take Apple to lose as much money as Amazon lost last quarter?
He didn't. Apple's profit for the quarter was $13 B - or about $140 M per day.
Amazon's profit for the quarter was $177 M.
For revenues, the ratio is obviously different - it took Apple about a month to have as much revenue as Amazon did for the entire quarter. But given the huge differences in their business, that's not a very useful comparison.
Amazon doesn't get any monthly bills from Google.
Advertisers pay Google directly for views and clickthroughs.
Thompson
Amazon is a major advertiser on Google. There are lots of queries that result in an Amazon ad at the top of the Google search results. That cannot be cheap.
The point is not whether they make money. It is that they are roughly, vaguely, somehow ANDROID! Android tablets are now, what, 40% of the market? The BS talking point is all that matters to some.
Except that the Fire is not an Android tablet. Although, now, I don't think there is a market for Android tablets.
Amazon is a major advertiser on Google. They are lots of queries that result in an Amazon ad at the top of the Google search results. That cannot be cheap.
True that... good point.
Thompson
This is just getting started. They'll probably have to pull or scale back Fire at some point.
Why? They aim is to clearly build a very large userbase. It is standard MO for Amazon. Quickly and aggressively expand into new markets. Amazon frequently takes a loss on a new market inorder to attract customers.
The more people with Fires the more people who will be using Amazon for buying books, movies, music and apps. This helps to lock people into Amazon resulting in even more purchases over the long term. Furthermore, these people are then more likely to buy other goods on Amazon. Personally I wouldn't be surprised if they release a kindle phone and set top box in order to further lock consumers into Amazon services.
Their business model is different from Apple. Apple's end goal is to sell more hardware. Amazon want to sell you anything you could possibly want to buy.
I think that's way off.
Start with what we know. Amazon said that they were selling 1 M Kindles OF ALL TYPES per week during the weeks before Christmas. That means that in the 6 weeks after the Kindle Fire launch, they sold about 6 M Kindles.
How many were Fires? There's no direct evidence, but we can speculate based on their Kindle growth rate. They claimed that total Kindle sales were up 177% last quarter (that is, 2011 sales were 277% of 2010 sales). Let's take the two extremes;
1. Assume that the older Kindle sales were unchanged. That is, ALL of the increased sales were from the Fire. That would mean that 64% of the total Kindle sales were Fire (177/277) and 36% were DX, etc. That would put Kindle Fire sales at 3.8 M (64% of 6 M).
2. We know that iPad sales were up 111% from the previous year last quarter. If Amazon's existing product sales were up by the sam 111%, then Kindle Fire sales were 66% of last year's figures. At this extreme, Fire was 24% of the total (66/277) or 1.4 M units.
So we can put the Kindle Fire unit sales somewhere between 1.4 and 3.8 M units. I predicted last week that the number would be between 2 and 3 M - and that's pretty reasonable given the few facts that we know. Call it 2.5 M at $200, so total revenues for the Fire were about $500 M. At the extremes, total Fire revenues were between $280 M and $760 M. And that's not counting returns if they were significant after Christmas.
Now, let's talk about losses. Estimates for losses have ranged from $5 to $10 per unit all the way up to $50 per unit on materials only. If materials losses were $50, total loss per device (including labor, overhead, quality cost, etc) would have been at least $75. Using the above estimate of 2.5 M units sold, that's $12.5 M losses at the low end up to $175 M on the high end. Compare that to their net income of $177 M. Without losses from the Fire, their net income would have been between 5% and 100% higher than it was. I really don't see any way to narrow it down further than that with the available evidence.
Really good analysis. The bottom line though is that $50MM in losses compared to what it did in advertising value and raising brand awareness during the holiday shopping season tends to make me think that this was a beautiful execution strategy on Amazon's part. Kindle Fire really isn't even a blip on the radar in practical terms.
I think that's way off.
Start with what we know. Amazon said that they were selling 1 M Kindles OF ALL TYPES per week during the weeks before Christmas. That means that in the 6 weeks after the Kindle Fire launch, they sold about 6 M Kindles.
How many were Fires? There's no direct evidence, but we can speculate based on their Kindle growth rate. They claimed that total Kindle sales were up 177% last quarter (that is, 2011 sales were 277% of 2010 sales). Let's take the two extremes;
1. Assume that the older Kindle sales were unchanged. That is, ALL of the increased sales were from the Fire. That would mean that 64% of the total Kindle sales were Fire (177/277) and 36% were DX, etc. That would put Kindle Fire sales at 3.8 M (64% of 6 M).
2. We know that iPad sales were up 111% from the previous year last quarter. If Amazon's existing product sales were up by the sam 111%, then Kindle Fire sales were 66% of last year's figures. At this extreme, Fire was 24% of the total (66/277) or 1.4 M units.
So we can put the Kindle Fire unit sales somewhere between 1.4 and 3.8 M units. I predicted last week that the number would be between 2 and 3 M - and that's pretty reasonable given the few facts that we know. Call it 2.5 M at $200, so total revenues for the Fire were about $500 M. At the extremes, total Fire revenues were between $280 M and $760 M. And that's not counting returns if they were significant after Christmas.
Now, let's talk about losses. Estimates for losses have ranged from $5 to $10 per unit all the way up to $50 per unit on materials only. If materials losses were $50, total loss per device (including labor, overhead, quality cost, etc) would have been at least $75. Using the above estimate of 2.5 M units sold, that's $12.5 M losses at the low end up to $175 M on the high end. Compare that to their net income of $177 M. Without losses from the Fire, their net income would have been between 5% and 100% higher than it was. I really don't see any way to narrow it down further than that with the available evidence.
That's a very reasonable breakdown... Without actual numbers it makes more sense than anything I've seen.
The investments in physical plants/warehouses is a CAPEX expense (cash flow) and does not hit the income statement. Only depreciation impacts earnings. And, Amazon is going to have A LOT of depreciation hitting its books in the near future
Stock buybacks also do not hit the income statement. They are a use of cash funds and hit Cash Flows (under Investing Activities)
Last, $.38 per share per quarter would generate a 130 PE ratio over the course of a year @ the current $195 stock price (an expansion of the 102 they are at today). A PE of 130 vs. Apple's PE of 13
Amazon has to become 10X more profitable just to justify their current market cap. Yeah, good luck with that
thanks for explaining some accounting 101 to kresh.
This was hardly a miss. Amazon managed a $0.38 per share earnings, crushing the street's estimste of $0.17.
Wow. Talk about putting lipstick on a pig! A year ago, Amaazon's eatnings were 91 cents a share. And you're BRAGGING about the fact that, a year later, they earned two-fifths of that? "Crushing street estimates"? Since when has the street had the ability to make decent estimates? And which particular "street" person are we talking about? The bag lady on the corner?
But PE doesn't work that way. It uses EPS over the last four quarters, which is a big difference for a cyclical company like Amazon. And I wonder if you were saying the same thing about AAPL when that stock's PE was over 100.
And market cap never needs to be "justified." It is what ever the market says it is.
I understand PE is based four quarters of results. I was projecting on an annualized basis
I would argue that the Holiday Q4 should have been Amazon's shining quarter - their highest profits. Like any other retailer. If anything, the PE has a lot of downside to the 130 above as revenues come down in future quarters to reflect seasonality
I agree - ultimately a company's worth and market cap is simply what investors are willing to pay. Amazon has done a very good job convincing investors of their plan. I simply do not believe this mirage is going to last much longer
Actually, this shows that Apple now has real competition and will soon be in second place for tablet sales. By this time next year Samsung and Amazon will be selling 3 tablets for every one that Apple sells.
</slappy>
How do you know. Amazon has never said how many they sold. Any numbers you've read anywhere are MADE UP [see the definition of "estimate"]. Even the title of this article [Kindle sales nearly triple] is comparing last years estimates with this years.