Amazon Earnings: Good Kindle Sales Are Bad for Earnings

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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.

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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.

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.

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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.

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