amazon.com Inc.

AMAZON.COM $74.71 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 428.6 million; Market cap: $32.0 billion) is a pioneer in online book retailing, with 4.7 million titles, as well as DVDs and music. Other products, ranging from electronics and computer games to toys, make up 42% of sales. Amazon Web Services lets online sellers market on its web sites. In the three months ended December 31, 2008, Amazon’s revenue rose 18.2%, to $6.7 billion from $5.7 billion a year earlier. Electronics sales were particularly strong, gaining 46%, to over $1.7 billion. North American sales make up 54% of total revenue, and rose 18%. International sales, which account for the remaining 46%, rose 19%. Earnings rose 8.7%, to $225 million, or $0.52 a share, from $207 million, or $0.50. Amazon holds cash of $3.7 billion, or $8.64 a share. The Kindle electronic book reader continues to be a strong seller for Amazon. The company recently released the Kindle 2. It’s still the size of a paperback and sells for $359 U.S. (Like the first version, Kindle 2 is only available in the U.S.) Kindle 2 is thinner, faster and lighter than the first Kindle, and has a longer battery life and more storage. Kindle downloads account for over 6% of sales of the 230,000 titles available on Amazon.com in both electronic and paper versions....

CGI GROUP INC., $10 (Toronto symbol GIB.A) is eligible to bid on upcoming U.S. government contracts for computers, software and technology services. The government has earmarked $50 billion U.S. for computer upgrades over the next five years. CGI’s long history of dealing with U.S. government agencies should help it win new contracts under this program. Buy. INDIGO BOOKS & MUSIC INC., $11 (Toronto symbol IDG) reports that its new Shortcovers web site, which lets users download free and paid electronic content from books and magazines, has attracted customers from over 150 countries. Unlike rival bookseller Amazon.com, which requires customers to buy its Kindle electronic-book reader in order to download books and periodicals, Indigo’s customers can view downloads on a wide variety of cellphones and other devices. This should give Indigo an advantage. Buy....

SONY CORP. ADRs $22 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1 billion; Market cap: $22 billion; Price-to-sales ratio: 0.3; WSSF Rating: Above Average) has struck a new alliance with Internet search engine Google. Sony hopes the new arrangement will spur sales of its Sony Reader electronic book device. Over the past few years, Google has converted several million books into electronic form. Under this new deal, users of the Sony Reader can download titles from Google for free, but only books whose copyrights have expired. Still, that’s over 500,000 titles. This deal should help Sony’s device compete with the popular Kindle book reader from online bookseller Amazon.com. Sony is a buy. FAIR ISAAC CORP. $14 (New York symbol FIC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 48.8 million; Market cap: $683.2 million; Price-to-sales ratio: 0.9; WSSF Rating: Average) is changing its corporate identity to FICO. (FICO is an acronym for Fair Isaac Corp.) Fair Isaac is still the company’s legal name, but it will now be known as FICO. Its ticker symbol is unchanged....

AEROPOSTALE INC., $25.23, symbol ARO on New York, reported higher sales and profits this week. Notwithstanding the weak economy, the teen-clothing retailer took market share from its rivals, mainly on the strength of its lower prices. During the quarter, Aeropostale posted positive same-store sales, while rivals The Gap and American Eagle saw their same-store sales drop. In the three months ended January 31, 2009, Aeropostale’s revenue rose 16.7%, to $690 million from $591.3 million a year earlier. Same-store sales rose 6%, and online sales jumped 88%, to $41.4 million from $22 million, as more Christmas shoppers chose to make their purchases through the Internet. Aeropostale also added 86 new stores, which brings it to a total of 914. It operates 28 stores in Canada. Aeropostale’s wide variety of clothing, low prices and aggressive promotions continue to drive up the company’s sales. Its earnings rose 5.4%, to $68.2 million, or $1.02 a share, from $64.7 million, or $0.96 a share. Higher holiday sales were offset by markdowns, which lowered profits....

MASTERS ENERGY, $1.65, Toronto symbol MSY on Toronto, jumped over 40% this week after it received a friendly $41.4-million takeover offer from ZARGON ENERGY TRUST, $13.54, symbol ZAR.UN on Toronto. To fund the purchase, Zargon plans to pay out a maximum of $5.7 million in cash. It will also issue up to 1.49 million trust units. Zargon is offering Masters shareholders a cash option and a units-plus-cash option. Under the cash option, Zargon will pay $1.83 for each Masters common share tendered until it reaches its maximum cash payout. Any remainder will be paid in Zargon units. Under the second option, each Masters common share may be exchanged for 0.12 of a Zargon unit. This option will also be pro-rated according to Zargon’s unit and cash maximums....

WELLS FARGO & CO., $8.61, New York symbol WFC, has cut its quarterly dividend by 85.3%, to $0.05 a share from $0.34. The new annual rate of $0.20 yields 2.3%. The lower dividend will save the bank $5 billion a year. To put that in context, it earned $2.7 billion, or $0.70 a share, in 2008. (Its 2008 earnings included $9.9 billion of pre-tax writedowns and other charges related to its purchase of financial services company Wachovia on December 31.) The savings should help Wells Fargo cope with higher loan defaults during the recession. Wells Fargo is making good progress integrating Wachovia into its own operations. Wells Fargo’s management still feels the merger will cut the combined company’s annual expenses by $5 billion. Wells Fargo has already written down most of Wachovia’s troubled loans and securities, so any further charges should be manageable. The company has also received $25 billion under the U.S. government’s Troubled Asset Relief Program....

AMAZON.COM $62.35 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 428.6 million; Market cap: $26.7 billion) has unveiled a thinner, faster and lighter version of its Kindle electronic reader. The Kindle 2 has seven times more storage than the first Kindle, as well as sharper images and a longer battery life. The Kindle 2 also has a text-to-speech feature that lets users listen to books or newspapers read by a computer-generated voice. The Kindle 2 costs $359 U.S., the same price as the first Kindle. (Kindle is only available in the U.S.)...

INDIGO BOOKS & MUSIC INC. $12 (Toronto symbol IDG; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 24.5 million; Market cap: $294 million; Price-to-sales ratio: 0.3; SI Rating: Extra Risk) aims to take advantage of the growing popularity of the Apple iPhone and other smart phones, as well as electronic book-reading devices. It will soon launch shortcovers.com, a new web site that will let users download free and paid electronic content from books, newspapers, magazines and blogs. The electronic book market is small compared to Indigo’s traditional book business. But Indigo hopes this new service will become as successful as Amazon- .com’s Kindle e-book reader, which accounts for over 10% of Amazon’s sales. Indigo is a buy.

AMAZON.COM, $63.26, symbol AMZN on Nasdaq, unveiled a thinner, faster and lighter version of its Kindle electronic reader this week. The Kindle 2 has over seven times more storage than the first Kindle, as well as sharper images and a 25% longer battery life. The new battery lasts up to four days on a single charge and recharges in four hours. The Kindle 2 also has a text-to-speech feature that lets users listen to books or newspapers read by a computer-generated voice. The Kindle 2 will begin shipping in two weeks, on February 24, at $359 U.S. each, the same price as the first Kindle. (Kindle is only available in the U.S.)...

SYMANTEC CORP., $15.33, symbol SYMC on Nasdaq, rose over 13% this week after it reported earnings that exceeded analysts’ consensus estimates. In the three months ended January 2, 2009, Symantec’s earnings, excluding one-time items, rose 20%, to $350.2 million from $291.7 million a year earlier. Earnings per share rose 27.3%, to $0.42 from $0.33 on 3.8% fewer shares outstanding. The latest earnings beat consensus forecasts of $0.34 a share. Sales fell slightly, to $1.51 billion from $1.52 billion. In the latest quarter, the computer security software maker saw sales of its consumer products and its data-storage and server-management services each rise 1.2%, partly offsetting a 3.8% decline in security and compliance software. International sales fell 5.8%, partly due to the strong U.S. dollar. However, despite a weak economy, U.S. sales rose 6.5%. Earnings rose despite the fall in overall sales, largely due to cost-cutting measures. Symantec is still a buy....