by Anthony John Agnello | September 29, 2011 8:00 am
On Wednesday, Amazon (NASDAQ:AMZN) dropped the bomb expected since the beginning of the year, announcing the coming of the Kindle Fire tablet. The $200 device represents what is the most promising alternative to Apple‘s (NASDAQ:AAPL) iPad to hit the market. Now comes the wait to see how consumers respond.
For investors wanting to cover their bases, however, it’s time to look beyond the tablet market itself and onto those industries the tablet market fuels — particularly, electronic publishing. Here are five publishers that stand to gain from the evolution of the tablet market.
Financial Times publisher Pearson (NYSE:PSO) has made an impact on the electronic publishing world during the past three months. In June, when Apple instituted new rules for magazine and book sellers requiring all partners to sell subscriptions and pubs through iTunes and the App Store giving Apple a 30% cut of each sale, the Financial Times broke off and opened a tablet-specific version of its website.
The company reported last Friday that the web version of the paper has a total of 700,000 users now, a number that’s bound to increase provided the web paper works on the Kindle Fire’s browser. Pearson’s Penguin Group also already enjoys brisk business on Amazon’s existing Kindle e-reader, so Fire should continue the trend.
The affordability of Amazon’s Kindle Fire and the drive to lower tablet prices following the liquidation of Hewlett-Packard‘s (NYSE:HPQ) ill-fated TouchPad mean tablets are quickly going to become more prominent among students at every level of education. For an educational publishing powerhouse like McGraw-Hill (NYSE:MHP), a company that saw its business increasingly shift from print to digital in 2010, more tablet-using students mean even greater digital sales going forward. It might not climb back up to the $70 per share it traded at in 2007, but it should help continue the company’s steady growth over the past 12 months.
Better Homes and Gardens remains one of the highest-circulated publications in the United States: more than 7.5 million issues per month, with an audience of 39 million readers. Publisher Meredith Corporation (NYSE:MDP) only brought its magazines like Better Homes, Fitness and Parents to the iPad in March, meaning its digital edition business still is a growing concern — and an increasingly important one considering both advertising and circulation revenue at the company have declined over the past year. Cheaper tablets that can push those digital magazines can help recover some of those losses. Like MHP, Meredith likely won’t climb back to 2007 share prices anytime soon, but at this point, any help is welcome.
The New York Times Co. (NYSE:NYT) was in need of some good news. Even though the company turned in strong second-quarter earnings in July thanks in no small part to digital ad sales and its paid subscription service, third-quarter ad revenues are expected to be worse than forecast. However, more digital reading device users for NYT to hock its electronic wares could translate to steadier earnings for the company going into 2012. That’s not to mention the company’s fleet of web businesses that can sell new apps to Kindle Fire and iPad users.
It is Amazon the publisher more than Amazon the retailer that will benefit from the growing tablet market. The company’s numerous new publishing imprints continue to line up major releases. Now with an entrenched place in the e-reader market, a competitive tablet of its own and control of approximately 40% of e-book sales on the iPad, Amazon is an even greater threat to competing publishers that rely on the company for distribution.
As of this writing, Anthony John Agnello did not own a position in any of the aforementioned stocks. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.
Source URL: http://investorplace.com/2011/09/amazon-kindle-apple-ipad-tablet-publishers/
Short URL: http://invstplc.com/1nxBjH4
Copyright ©2014 InvestorPlace Media, LLC. All rights reserved. 700 Indian Springs Drive, Lancaster, PA 17601.