Amazon Falls After Wal-Mart Plans to Stop Sellling Kindle

Sept. 20 (Bloomberg) -- Julie Hyman reports on Walmart, who is going to no longer carry Amazon products. She speaks on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

Amazon.com Inc. (AMZN) shares declined after Wal-Mart Stores Inc. (WMT), the world’s largest retailer, said it will stop selling Amazon’s Kindle tablets and e-readers.

Wal-Mart decided not to carry Amazon’s products beyond its existing inventory and purchase commitments, Sarah Spencer, a spokeswoman for the Bentonville, Arkansas-based company, said today in an e-mailed statement. Amazon, the top Web retailer, dropped 0.3 percent to $260.81 at the close in New York.

As Amazon seeks to challenge Apple Inc. with an expanding line of Kindle e-readers and tablet computers that offer easy access to its online store, it is meeting resistance from the brick-and-mortar retailers that compete with the e-commerce giant. Wal-Mart’s move follows Target Corp. (TGT), which said in May it would stop selling Kindles.

“When Wal-Mart sells a Kindle, they’re effectively putting in their customers’ laps a cash register for competitors,” Scott Tilghman, an analyst at Caris & Co. in Boston, said in an interview.

Amazon boosted second-quarter sales by 29 percent from a year earlier to $12.8 billion. By comparison, Wal-Mart’s second- quarter revenue increased 4.5 percent, to $114.3 billion.

New Devices

Amazon earlier this month unveiled a new line of bigger, faster and sleeker Kindle e-readers and tablets as Chief Executive Officer Jeff Bezos seeks to draw consumers that are facing a widening array of choices for the devices. At stake is a piece of a market that may reach $66.4 billion this year, according to research firm DisplaySearch.

Removal from Wal-Mart’s store shelves isn’t much of a setback for Amazon, because it’s cheaper to sell Kindles online, said Sarah Rotman Epps, an analyst at Forrester Research Inc. (FORR)

“For Amazon, it’s much more profitable to sell through their direct channel, which is the majority of that business anyway,” Rotman Epps said in an interview.

Drew Herdener, a spokesman for Amazon, declined to comment. The Seattle-based company’s shares have gained 51 percent this year.

Reuters reported Wal-Mart’s decision earlier today.

To contact the reporters on this story: Chris Burritt in Greensboro at cburritt@bloomberg.net; Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Robin Ajello at rajello@bloomberg.net

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