Ahead of the Bell: Amazon gains ahead of open

AP News
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Posted: Sep 07, 2012 8:27 AM
Ahead of the Bell: Amazon gains ahead of open

NEW YORK (AP) — Shares of Amazon.com Inc. rose nearly 1 percent in Friday's premarket trading as analysts said the company's updated Kindle Fire tablet computer and new e-reader models could sell in the millions and ramp up demand for its content.

If demand for the company's previous devices holds up for its new ones, Amazon could sell millions of the new e-readers and the Fire, said Mark Mahaney of Citi Investment Research. He and other analysts also said that Amazon was ramping up the competition with rival tablet makers including Apple Inc., Google Inc. and Samsung Electronics Co. with its "aggressive" prices.

Amazon has been selling lower-priced tablets at thin, if any, profit margins to boost sales of digital items from its online store. That's because Amazon's bread-and-butter is not its Kindle gadgets but the movies, books and music that people consume through them. The company is adding to its stable of devices to offer consumers more avenues to buy Amazon's content, said Jefferies analyst Brian Pitz.

But Amazon's new devices show "that it is serious in becoming a major player in hardware" as well as content, said Sterne Agee analyst Shaw Wu. He forecast strong competition with tablets such as Google's new Nexus 7 and Microsoft Corp.'s upcoming Surface.

On Thursday Amazon said it is coming out with a high-end version of the Kindle Fire, the Kindle Fire HD, setting up a head-to-head battle with Apple. An 8.9-inch model will go for $299. That means a device nearly as big as the iPad, the market's dominant tablet, will sell for at least $100 less.

The updated version of the basic, 7-inch Kindle Fire will cost $159, down from the old model's $199.

The Seattle company also provided details on a new e-book reader called Paperwhite, priced at $119.

Amazon's stock gained $1.82 to $253.20 before the market open.