Amazon Earnings: Good Kindle Sales Are Bad for Earnings

Simon Dawson | Bloomberg | Getty Images

Amazon earnings are on tap—and it is perhaps the highest-flying big tech stock out there, trading at more than 10 times revenue and a nosebleed P/E ratio.

Wall Street's looking for Amazon to report revenue of $22.3 billion and 28 cents earnings per share. Those expectations come despite the fact that Amazon actually guided to a loss at the midpoint of its range.

(Read More: Apple or Samsung: Who's Cooler Now? )

Gene Munster over at Piper Jaffray sees good things coming from this report, though his own revenue and EPS estimates are below the Street — he points out that research firm Channel Advisor had holiday e-commerce numbers that suggested Amazon's revenue held up to expectations, and Channel Advisor seems to have predicted the direction of eBay's earnings pretty well two weeks ago.

Amazon: Good Kindle Sales Bad for Earnings

Two special wild cards here: One, guidance. Analysts' expectations for the March quarter are pretty bullish by historical standards, at $16.84 billion — so if Amazon guides to a midpoint below that, we'll see how the stock responds.

And then there are Kindles. Simply put, good Kindle sales are bad for earnings — so if Amazon sold a lot of them, it's likely to hurt operating income. Analysts seem to think Amazon shipped about 5 million of them last holiday quarter, so it seems a safe bet it moved quite a few more this season with a broader product lineup and the general excitement about tablets.

(Read More: Why Microsoft Is a 'Sneaky Long' Play: Pro )

Another angle on the Kindle question: Amazon has never actually given a hard number to Kindle sales, so if they do, that could excite traders. But even if they don't give a hard number, good color about sales growth could prove tantalizing enough to keep investors interested.

(Read More: Yahoo Earnings: Is Marissa Mayer's Plan Working? )