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  • once_on once_on Sep 12, 2012 8:55 AM Flag

    Core Competency in Loosing Money

    Don't tell us they don;t lose money .. Free cash flow has been negative $5B over past two Q's (50% drop in cash on hand!), and they announced they will even lose money this quarter in the income statement - and I am sure more FCF losses. FCF losses later translate into massive EPS drops, as the CapEx becomes accumulated operating expense through depreciation.

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    • The issue is that the analyst community has only viewed the tablet move as an opportunity. It has failed to recognize the move was inherently defensive to protect against Apple overtaking its core cash generator -- Kindle eBooks. To protect itself, AMZN sunk billions of losses into tablets (which are still getting rated as below the Nexus 7) with the hope of protecting and growing its digital content. Of course, Apple's predictable competitive response to match pricing on iBooks (and Google's soon to be announced on GooglePlay), will limit the adoption/benefit for Amazon. Again, if I were at Apple or Google, I would offer a 10% credit on the first $250 of digital content purchases (while matching Amazon's prices) to migrate more of the ebooks content to their platform.

      Apple/Google should also streamline the conversion of Kindle Books into iBooks/eBooks native format and "sync" the Kindle purchase history in their respective clouds.

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