Oprah's Favorite Gadget, The Next Big Thing?

With Amazon reporting earnings on Thursday after the bell, some investors are hoping to hear that Kindle is well on its way to becoming the next iPod, just like Citigroup’s Mark Mahaney predicted over the summer.

Kindle Kraze?

In fact, some tech watchers are speculating that Kindle has become so popular, a new and improved version is on its way – perhaps as soon as February.

What’s Kindle? It’s essentially a wireless portable reading device with instant access to more than 190,000 books, blogs, newspapers and magazines.

Never heard of it? Kindle remained a kind of niche thing untilOprah called it her favorite new gadgetin the fall. Then sales took off like a shot with Kindle becoming the best selling electronic device on Amazon’s site for all of 2008.

Mahaney estimates Amazon sold about 400,000 units last year and that Kindle hardware and book sales will contribute about $1 billion to Amazon's revenue in 2010.

Earnings Preview

It's no secret that this was a tough Christmas for anyone in retail -- or e-tail for that matter. However, did Amazon buck that trend?

Maybe. They say the holiday season was its "best ever," with orders rising 17 percent to more than 6.3 million items on its busiest day, which was Dec. 15. Sounds promising, however the company did not give dollar figures or say if its average value of orders changed, though.

Analysts are cautious. Mahney tells Fast Money he’s concerned about Amazon’s earnings report. "They could disappoint."

In a recent note to investors, Jefferies & Co. analyst Youssef H. Squali says much the same; "visibility into margins remains limited and aggressive discounts/promotions may have eaten into profits/margins."

Meanwhile, Piper Jaffray analyst Gene Munster said in a note to clients that although the company "is the clear leader among Internet retailers, taking significant market share, we believe that the difficult consumer spending headwinds will continue to pressure growth and margins."

Munster rates the stock "Neutral" with a $45 price target.

So what’s the bottom line?

“I’m not a bull on Amazon but I am a bull on Kindle,” says Mahoney.

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