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Amazon’s slow burn, courtesy of the Kindle Fire

Jennifer Collins Feb 1, 2012

Adriene Hill: Amazon’s shares are fizzling. That’s after the company forecast it might lose money in the first few months of the year. Turns out some Amazon’s trouble has to do with the success of its Kindle e-readers.

Marektplace’s Jennifer Collins reports.


Jennifer Collins: Amazon couldn’t sell Kindles fast enough this holiday. The company says its e-reader sales tripled from a year ago.

So why are profits dropping? Tech consultant Tim Bajarin says blame Amazon’s newest device, the Kindle Fire.

Tim Bajarin: They actually sell it at a loss.

Bajarin estimates the Kindle’s components cost $202. The company sells it for $199. Bajarin says Amazon needs the Kindle to stay competitive. It’s a tool to sell movies, books, music — all, of course, through Amazon.

Bajarin: I actually think in the long term it’s a very smart move, but it’s not one that pays off immediately.

Or even in the near future. Amazon says next quarter it may report a loss. But it’d be hard to tell that listening to Amazon’s Chief Financial Officer Tom Szkutak in a conference call with analysts.

Tom Szkutak. We see a lot of opportunity in front of us, and yes, there are some pockets of softness.

Softness — that’s business speak for things that aren’t so much on fire.

I’m Jennifer Collins for Marketplace.

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