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Street Fight: Apple Vs Amazon

Shares of Amazon traded lower Monday as investors feared CEO Jeff Bezos was about to roll up his sleeves and launch a pricing war. What happened?

The speculation began on Monday after Amazon removed all e-books published by Macmillan from its site due to a dispute over pricing.

The New York Times and other media reported that Macmillan asked Amazon to raise the price of e-books to around $15 from $9.99.

Although Amazon ultimately yielded to Mcmillan it wasn't an amicable agreement. On Amazon.com they published this harsh statement.

“We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles,” Amazon said. “We want you to know that ultimately, however, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books.”

What’s the trade?

It suggests to me Amazon does not have a stranglehold on the e-books market, says Karen Finerman at least not in the way Apple has a stranglehold on MP3 music. That means the Kindle is not an iPod like device. And that makes me concerned about Amazon’s valuations.

If you’re bullish on the market, I think the pullback might be an opportunity to get long Amazon , says Guy Adami.

If you’re buying or selling Amazon for the Kindle, you’re trading the stock all wrong, adds Pete Najarian. However, if you’re very bullish on global growth the 30 P/E might not be so bad.


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Trader disclosure: On February 1st, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Is Short (IJR), (IWM), (SPY), (MDY), (UNG), (USO); Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leaps; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm And Finerman Own (FLS); Finerman's Firm Owns (KFT), (MSFT); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (BSX); Najarian Owns (AAPL) Call Spread; Najarian Owns (AKAM) Call Spread; Najarian Owns (BP), Is Short (BP) Calls; Najarian Owns (ITMN) Call Spread; Najarian Owns (MS), Is Short (MS) Calls; Najarian Owns (PFE); Najarian Owns (XLF) Calls; Najarian Owns (STLD) Calls; Terranova Owns (XLF) Calls; Terranova Owns (BAC), (JPM), (XOM), (HAL), (OIH), (FCX), (GOOG), (EMC), (DELL), (MSFT), (QCOM); Terranova Is Long British Pound March Futures

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CNBC.com with wires