This weekend brought us something of a coincidence. First, the New York Times published a gushing, if somewhat ill-informed, piece on Amazon.com (AMZN), pushing the official story hard: “Amazon Says Long Term And Means It”.
I had quite a few issues with this article-- tried commenting on it or on NYT’s facebook page, but that wasn’t easy. The issues are rather obvious:
- Amazon.com has been guiding down for several quarters, it was not just on October that the company started pushing the “we are investing” theory;
- Amazon.com missed earnings by a large margin – by more than 40%, not by little-- as said in the article;
- Many other stocks in the market have their sights on the long-term, yet don’t get awarded the huge valuations Amazon.com commands (2011 P/E is still 151), and still the article talks as if Amazon.com is somehow being unjustly punished;
- The article manages to paint Best Buy (BBY) as if it was going out of business because its earnings fell 29% in the most recent quarter, while completely ignoring the fact that Amazon.com’s earnings fell 74%! At that rate, Amazon.com would go out of business first. After all, its earnings are lower and falling faster than Best Buy’s! (No wonder I wrote an article called “Is Best Buy Eating Amazon.com’s Lunch?”);
- Finally, it pushes the idea that the Kindle Fire has been criticized because it gets compared to the iPad, when it is well know that the device has issues, identified by its own users on Amazon.com’s own website, which might well lead to a lot of returns.
At this point we could be just in front of a regular, if quite misleading, pump job. It skimps on some facts, it distorts others, but the market is filled with pump jobs, so it isn’t really much of a surprise. That’s what you think until you get the OTHER article: “Amazon Includes Circular In Weekend Newspapers”. Who do you think was the happy receiver of Amazon.com’s advertising bucks?
Among the Target, Best Buy and Radio Shack ads bundled with my Saturday New York Times this morning is a surprise: an 8-page circular from Amazon advertising the company’s new free one-day shipping offer.
Now, let’s just say this can be an incredible coincidence, and there’s no conscientious attempt at paying back for the business, shall we?
Disclosure: I am short AMZN.