Amazon never releases sales information regarding the Kindle family of e-readers. Undeterred, Paulo Santos, writing for Seeking Alpha, does the math to show that Kindle sales are tanking:
One of the most lauded things about Amazon.com’s (AMZN) latest quarter was how the gross margin rose to 23.95% of revenues, from 22.82% in the same quarter the year before. This made for 114 basis points (1.14%) of improvement, which on revenues of $13.2 billion meant an improvement of $150 million that flowed to the operating profit, helping it come in above expectations. I will show how this happened precisely because of a very negative development.
As a commenter suggests, Amazon stock was rewarded for increased Kindle sales last year - which hurt margins, and is now being rewarded for improved margins - only possible due to decreased sales of Kindle. Santos notes that any other company’s stock would be hammered for this news - a point I brought up earlier this year:
What is really perplexing is that Amazon’s stock is still much more expensive than Apple’s. The P/E ratio for Amazon (102.5) is far greater than Apple’s (12.9). It is beyond my understanding why a financial juggernaut like Apple is priced an order of magnitude cheaper than a company that can barely muster 1% profit.
I’ve been a long-time Kindle customer, but a business whose bottom line only improves with tanking sales doesn’t instill much confidence in the platform.