Replies to post #77 on Amazon.com Inc (AMZN)

[Nickybee]

Kindle: Impact on Amazon Stock (Found at The Street.com)
Trefis
07/20/10 - 11:47 AM EDT
Trefis members have created forecasts for two drivers of Amazon's(AMZN) stock over the last week: (1) Kindle Pricing, (2) Kindle Units Sold. Their forecasts suggest that Kindle Pricing will not decline as low as the Trefis forecast, while Kindle Units Sold will not rise as high as the Trefis forecast.
These projections suggest a net upside of less than 1% for Amazon's stock. Amazon's Kindle e-reader device competes with e-readers and tablets from players like Apple(AAPL), Sony(SNE) and HP(HPQ).

Amazon's Kindle Hardware constitutes only 1.3% of the $119 Trefis price estimate for Amazon's stock. In comparison, Electronics & General Merchandise is 48%; Books, DVDs and Music is 37%; and Cloud and Other Web Services is close to 4% of the Trefis estimate for Amazon's stock.

Since Kindle forms a very small part of Amazon's overall business, Amazon's stock is not impacted much by 1) Kindle Pricing and 2) Kindle Units Sold. Below are the charts showing recent estimates created by Trefis members for the two drivers.

1. Kindle Pricing
The average of forecasts for Kindle Pricing created by Trefis members indicated a projected decrease from $237 in 2010 to $162 by the end of the Trefis forecast period, compared to the baseline Trefis estimate of a decrease from $217 in 2010 to $135 by the end of the Trefis forecast period. The member estimates imply an upside of less than 1% to the Trefis price estimate for Amazon's stock. In the past, average Kindle Pricing has fallen from $380 in 2008 to $310 in 2009.

You can drag the Kindle Pricing forecast trend-line above to express your own view, and see the sensitivity of Amazon's stock to Kindle Pricing.

Our complete analysis for Kindle Pricing is here.

2. Kindle Units Sold
The average of forecasts for Kindle Units Sold created by Trefis members indicated a projected increase from about 1.8 million in 2010 to about 9.2 million by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 2 million in 2010 to 9.8 million by the end of the Trefis forecast period. The member estimates result in a negligible change to the Trefis price estimate for Amazon's stock. In the past, Kindle Units Sold increased from about 0.3 million in 2008 to about 1 million in 2009.

You can drag the Kindle Units Sold forecast trend-line above to express your own view, and see the sensitivity of Amazon's stock to Kindle Units Sold.

Our complete analysis and model for Amazon's stock is here.