Amazon Rallies To New All-Time Highs; Street Likes New Kindles

The new Kindle Paperwhite

Amazon.com shares have spiked to a new all-time high Friday following the company’s launch yesterday of a new line-up of Kindle e-readers and Kindle Fire tablets.

As I noted in my live blog yesterday from the launch event in Santa Monica, Amazon basically laid the ground work for its holiday 2012 Kindle lineup. The company’s new line has 7 new or improved models, ranging from the basic version at $69 (it used to be $79) to the high-end $499 8.9-inch Kindle Fire HD with 4G LTE connectivity. There are also 7-inch and 8.9-inch WiFi only versions of the Fire HD; the company also unveiled a new e-reader called the Paperwhite, and cut the price of the original version of the Fire to $159, from $199.

While I don’t think Apple has a lot to worry about here – and we’re still waiting to see the much-rumored new iPad mini, which is expected to take on the Fire in the 7-inch tablet segment – there is no question that Amazon has strengthened its hand in the media tablet market.

Here’s a roundup of some of the commentary on the launch from sell-side analysts:

  • Matt Nemer, Wells Fargo: He notes that the announcements were mostly anticipated, but points out that there were a few surprises, including the new larger Kindle Fire HD, the extremely competitive 4G data plan for the high-end Fire at $49.99 and the price cut for the first generation Kindle.
  • Shawn Milne, Janney Capital: Milne writes that the Fired HD 4G LTE at $499 was “the surprise of the event,” asserting that Amazon appears to be testing the higher end of the market dominated by the iPad. But he thinks the best sellers will be the original Fire at $159, and the 7 inch Fire HD for $199, “as these price points are likely the sweet spot for AMZN.” He adds that while the company basically said it is not making money on the hardware, Amazon appears to be “succeeding in its digital media strategy despite a massively competitive environment.”
  • Brian Pitz and Brian Fitzgerald, Jefferies: Their view is that the new hardware is “paving the way again for accelerated consumption of content.” But they add that the hardware refresh was “as expected,” and that new features “seem more tailored to improve user experience than to outdo competition.”
  • Colin Sebastian, Baird: He contends the announcements “mark a major step for Amazon in the tablet market…while solidifying a strong lead in the e-reader market.” Like other analysts, he asserts that there were few surprises yesterday, but adds that his tests of the new deices “suggest the Fire HD stacks up well against current top competitors.”
  • Shaw Wu, Sterne Agee: He writes that he finds the price points “aggressive” in response to recent entrants, including the Google Nexus 7 and Microsoft Surface. He says the $199 version with 16 GB of storage appears aimed at the Nexus 7, which offers 8 GB of storage. (I would note here that CEO Jeff Bezos said at the the event that a tablet with only 8 GB of storage would be “DOA.”) Wu adds that he thinks the new round of Kindles will make it more difficult for aspiring players like Samsung, HTC, Hewlett-Packard, Dell, Lenovo, Acer and Research In Motion to gain traction in the market. Apple, he says, could see competitive pressures, but is “least impacted given its structural and strategic advantages.”
  • Brian White, Topeka Capital: “In our view, Amazon’s updated Kindle Fire portfolio is clearly an improvement from the original 7-inch version and now includes a larger form factor with 4G; however, nothing really grabbed our attention and this announcement will do little to halt the momentum of Apple’s iPad franchise that continues to gain momentum around the world,” he writes.
  • Chad Bartley, Pacific Crest: “One thing is clear: Amazon will prices its Kindle devices aggressively to compete and sell content, apps, services and products,” he writes. Amazon’s aggressive pricing adds to our near-term margin concerns, but the strategy, combined with its rich ecosystem and marketplace, could be positive for the long term.”

AMZN is up $7.34, or 2.9%, to $258.72.

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