The Wall Street Journal’s ”Weekend Edition” offers up a tease of a story on Amazon’s Kindle in its venerable “Heard on the Street” column . Though its headline, “Kindle is a Page Turner for Amazon Investors,” implies that the story might actually deliver valuable insight into the impact of the Kindle on Amazon’s bottom line, it does nothing of the sort. It simply rehashes much of the commentary that’s already been out there for months – like this gem: “The Kindle offers Amazon the chance to become the Apple of the e-book world. Its challenge will be ensuring its margins don’t get compressed.”
The column erroneously attributes Amazon’s hyper-inflated market valuation to Kindle mania, stating: ”But a lot of hope is factored in, with the stock trading at 48 times 2009 estimated earnings. Investors should beware attributing too much value to the new e-book reader.” The problem with this assessment is that Amazon almost always trades at a lofty valuation, and, in fact, was trading at 55x earnings just two years ago - before the market’s and Amazon’s pre-crash peak and before the Kindle was on anyone’s radar.
