D-on-Net

Amazon denied motion to stay by New Jersey Supreme Court

Amazon [AMZN] just released an 8K filing stating the New Jersey Supreme Court has denied the company's motion to stay on its appeal regarding a courts previous decision to terminate Amazon's contract with Toys R Us.  As a result of the denial, the company's release goes on to state it is now likely to suffer a $25M hit to its 2Q06 operating income and a total of $50M in 2006 due to Toys R Us no longer paying on its contract.  Amazon goes on to say "we believe we will prevail on the appeal and that Toysrus.com’s claims lack merit", but I personally believe the company has a shot in the dark at winning this case, which will likely lead to the $50M impact in 2006.  However, I also believe this loss is already priced into the stock given the courts previous ruling.  Regardless, this is another hit to a company that is already scrambling to bring leverage to its operating margins and something to get the Street back in its favor. 

Amazon launches POD for publishers

Amazon's [AMZN] announcement of its print-on-deman program for book publishers bears the question if this is a retaliation towards Google's Book Search efforts or if these programs could potentially compliment one another. Amazon's POD efforts enable authors to sell less popular titles by enabling them to be printed as they are ordered, which is a compelling value proposition to any author.  The press release states "For a limited time, BookSurge will provide discounted book scanning services with no upfront investment to the publisher and free setup for titles with POD-ready digital files.  Publishers participating in POD will also be provided the option to enroll these titles into Amazon's Search Inside the Book and Amazon Upgrade programs at no additional cost."  I believe Google's Book Search program is actually complimentary to Amazon's POD program and is likely to aid in driving sales to Amazon.  Google's Book Search program is really a marketing opportunity for authors enabling them to expose the topics of the book to a larger user base.  Authors have the opportunity to provide paragraph teasers, full sample pages, or the entire book through Google Book Search.  The value proposition Google provides is a larger audience base intent on searching for information relevant to their query and more importantly "links them to places where [searchers] can buy them immediately."  This is where Amazaon and its POD program can come into play.  Authors who don't have the financial ability to print large quantities of their books and perhaps are not gaining much traffic on their own website now have a two-headed monster they can set in motion in hopes of driving sales.  By authorizing portions of your book to be searchable on Google Book Search and entering Amazon's POD program, an author can market its work to a larger user audience and point them in the right direction to purchase the book without risking additional upfront capital in mass production. 

Amazon's POD efforts also resembles the wildly successful business model of Digital River [DRIV].  Digital Rive helps companies who sell through CD-Roms, but don't want to invest in large CD-ROM inventories.  DRIV creates this efficiency for companies by running a CD-ROM creation studio that makes copies as they are ordered. 

Amazon fouls up on NCAA champion

Amazon may be responsible for jinxing the UCLA Bruins NCAA title hopes or at least it may be an excuse fans will use.  The company mistakenly started sending out e-mails to Amazon users to sell championship NCAA merchandise while proclaiming the UCLA Bruins the 2006 champions before the game even started.  OOPS!  Florida 73 - UCLA 57.