Photo: Steve Kovach, Business Insider
Bad news for the Kindle Fire bulls. Barclays is cutting its estimates:As a result of Amazon’s 4Q11 call, 3rd party data, and colour from the supply chain, we are lowering our Kindle Fire Tablet, Kindle eReader, and AMZN earnings estimates. While we believe the Kindle Fire launch in 4Q11 was a success as it catapulted AMZN to the #2 position in the tablet market (after Apple), we think our 4Q11 5.5M Kindle Fire sales estimate was too aggressive, and now believe AMZN sold closer to 5M units. Third party data helps us triangulate on this number as IHS estimates AMZN sold 3.9M Fires, while DisplaySearch estimates the supply chain shipped 6M Fire units in 4Q11.
In 2012, we now believe AMZN will sell 17.1M Tablets and 18.4M Kindle eReaders (down from 18.4M Tablets and 23.8M eReaders). Our lower Tablet numbers reflect our belief that AMZN may not introduce a new 7″ Kindle Fire Tablet or 8.9″ Tablet until 2H12 (versus prior 1H12 estimate), and market pricing dynamics will get more competitive given the recently-introduced $199 8GB NOOK tablet. Barclays Capital’s Asia Ex-Japan LCD Analyst Jamie Yeh lowered her E-Ink Electronic Paper Display (EPD) estimates on 1/31/12 as she thinks eReader sales are being cannibalised by Tablets and the U.S. eReader addressable market was probably originally overestimated.
Other reasons why we are comfortable lowering our AMZN estimates include: (1) a shift towards 3rd party sales could affect sentiment as revenue growth slows while AMZN valuation is already stretched; (2) AMZN has spent aggressively thus far in 2012; and (3) Prime subs could be lower than we originally thought.
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