Amazon.com to report 4th quarter marked by expanded Kindle offering, strong e-book sales

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Earnings Preview: Amazon reports 4Q on Thursday

SAN FRANCISCO — Amazon.com Inc. reports its fourth-quarter results on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: In the fourth quarter, the Seattle-based online retailer countered increasing competition in the electronic reader market with the release of an international version of its Kindle e-reader. The company also experienced a holiday shopping season that was much brighter than the year before.

In October, Amazon cut the price of the Kindle yet again — lopping $40 from its price tag to $259 — and said it would start selling a version of the device that works in 100 countries and be sold to readers outside the U.S.

The company also enlarged the Kindle offering with the release of free software in November that lets consumers buy, download and read Kindle books on a PC. Amazon already offered a similar application for Apple Inc.’s iPhone and iPod Touch that lets users access Kindle books whether or not they own the e-reader.

To keep up with the Kindle during the quarter, Sony Corp. began shipping its latest e-reader, the Daily Edition, while Barnes & Noble rolled out its first offering. Like the Kindle, both can wirelessly download books from dedicated online e-book stores.

Amazon has not disclosed the number of Kindles it has sold so far, but it marked a milestone on Christmas Day, when it sold more e-books than physical copies for the first time.

Also during the holiday shopping season, Amazon sold more than 9.5 million items on its busiest day, which was Dec. 14. The company said popular items included the Kindle, Apple Inc.’s iPod Touch, the DVD “Harry Potter and the Half-Blood Prince,” and the video game “Call of Duty: Modern Warfare 2.”

BY THE NUMBERS: In October, Amazon predicted fourth-quarter revenue of $8.13 billion to $9.13 billion. Analysts polled by Thomson Reuters expect $9 billion in revenue and earnings of 72 cents per share.

ANALYST TAKE: In a recent client note, Jefferies & Co. analyst Youssef Squali said he expects $8.8 billion in revenue and earnings of 75 cents per share.

The analyst estimated that Amazon’s North American sales rose 25 percent year over year to $4.54 billion, while its international sales rose 38 percent to $4.25 billion.

Squali rates the stock “Buy” with a $150 price target.

WHAT’S AHEAD: More companies are releasing e-readers this year in hopes of conquering a slice of the small but fast-growing market, so Amazon is expected to keep developing the Kindle to stay ahead of the pack.

It has already made some changes this year: The company unveiled an international version of its larger-screen Kindle, the $489 Kindle DX, earlier this month, and said last week that this year it will let software developers create and upload applications that will then be available to users through its Kindle Store.

STOCK PERFORMANCE: Amazon shares finished the quarter up 44 percent, closing at $134.52 on Dec. 31.