amazon.com Inc.

NORTHBRIDGE FINANCIAL CORP. $38.40, symbol NB on Toronto, rose over 26% this week after Fairfax Financial Holdings, symbol FFH on Toronto, announced that it will make an offer to acquire the shares of Northbridge it does not already own. Fairfax hopes to complete the transaction in the first quarter of 2009. Fairfax, which currently has a 63.1% interest in Northbridge, is offering $39 a share in cash for a total of $686 million to obtain the 36.9% interest outstanding. We recommended Northbridge as a buy at $31 in the most recent issue of Stock Pickers Digest. That’s when we pointed out that the chance of a Fairfax takeover of the company added to its appeal....

AMAZON.COM $35.84 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 428.8 million; Market cap: $15.4 billion) reports that in the three months ended September 30, 2008, profits rose 47.5%, to $118 million or $0.28 a share from $80 million or $0.19 a share a year earlier. Revenues rose 30.7%, to $4.3 billion from $3.3 billion. Despite the improved results, Amazon has now lowered its 2008 sales forecast to between $18.5 billion and $19.5 billion, down from $19.4 billion to $20.1 billion previously. The company anticipates a weakening economy and slower consumer sales for the rest of this year at least. Amazon continues to win market share by lowering prices — and it has kept profit margins high with its heavy investments in cost-cutting infrastructure. We feel its long-term growth prospects remain strong....

I still feel that government efforts now underway are likely to solve today’s financial crisis. However, these steps come at a price. My best guess is that we’ll see much higher inflation as a result of all this newly supplied liquidity, probably in the early part of the next decade. You should keep this inflationary potential in mind, but it’s a mistake to try to profit from it by loading up on Resources stocks. That’s partly due to the drawbacks of these stocks. They do provide a handy hedge against inflation. Before that coming bout of inflation arrives, however, you can expect highly volatile stock markets, volatile resource prices, and corporate breakdowns in the Resources sector. You should spread your investments out across most if not all of the five main economic sectors. But I plan to err on the side of too little rather than too much resource exposure in the next few years....

AMAZON.COM $71.54 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 425.9 million; Market cap: $30.5 billion) has purchased bookoriented, social-networking website www.shelfari.com. Shelfari lets users catalogue online the books they own or have read. It also lets users organize book groups, plus post profiles of their literary tastes. Readers with similar interests can then interact and share book recommendations. Amazon’s investments in increasingly popular social-networking websites will complement the company’s Kindle electronic ebook reader, launched in November, 2007. Users can download newspapers, magazines and books to the Kindle. Amazon.com is a buy.

REITMANS, $16.28, symbol RET.A on Toronto, reports that earnings in the three months ended August 2, 2008 rose 10.3%, to $35.4 million or $0.50 a share from $32.1 million or $0.45 a share a year earlier. Sales fell 0.8%, to $289.5 million from $291.9 million. Same store sales fell 4.5%. In the latest quarter, continuing unseasonable weather, lower consumer confidence and rising gasoline prices reduced store traffic. That in turn dampened sales. However, the strong Canadian dollar and better inventory controls boosted profits. Reitmans is Canada’s largest specialty woman’s wear retailer. The company holds $230.9 million or $4.04 a share in cash. It pays a $0.18 quarterly dividend, which currently gives it a 4.4% yield....

AMAZON.COM $82.13 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 425.9 million; Market cap: $35.0 billion) is launching a new online store called Amazon Video on Demand, which will sell TV programs and movies. Customers can download movies to their computers, or store them at Amazon.com. Customers will also be able to start watching any of the 40,000 movies or TV programs available without having to wait until files are completely downloaded. Unlike most of its competitors such as Apple’s iTunes store, Amazon will use streaming video. That’s similar to programs now available through cable video-on-demand services. Amazon.com is a buy.

GREY ISLAND SYSTEMS INTERNATIONAL $0.28, symbol GIS on Toronto, moved up this week after reporting record revenues and earnings. In the three months ended June 30, 2008, Grey Island’s revenues rose 50.1%, to $5.8 million from $3.8 million a year earlier. The company earned $440,795 or $0.005 a share, compared to a loss of $336,682 or $0.004. Grey Island had positive cash flow of $777,879 or $0.009 a share in the latest quarter, compared to negative cash flow of $69,470 or $0.0008 a share. The company holds $11.3 million or $0.15 a share in cash, and has almost no debt. Grey Island continues to successfully expand in the United States. In the latest quarter U.S. sales rose 84.9% to $4.6 million (78% of total revenues), offsetting a 10.4% decrease in Canadian sales to $1.3 million. Grey Island is an Internet-based automated vehicle location and mobile data services provider for the fleet management market. The company is building a growing customer base of mainly municipal and state government customers....

AMAZON.COM, $78.31, symbol AMZN on Nasdaq, jumped almost $8 this week after the company reported strong revenues and profits in the three months ended June 30, 2008. Revenues rose 40.8% in the latest quarter, to $4.1 billion from $2.9 billion a year earlier. Excluding the favorable impact of foreign currency gains, revenues were up 35%. International sales from Amazon’s UK, German, Japanese, French and Chinese sites rose 47%, or 34% before foreign exchange gains. Earnings rose 202.3%, to $158 million or $0.38 a share, from $78 million or $0.19 a share. The latest quarter included a gain of $53 million on the sale of the company’s European DVD rental assets....

AMERIGO RESOURCES, $1.34, symbol ARG on Toronto, has a contract with Codelco, Chile’s state-owned copper producer, to process the tailings from El Teniente, the world’s largest underground copper mine. Tailings are the waste rock produced in the mining process. Amerigo treats the tailings to extract copper and molybdenum. Amerigo rose this week after reporting lower power costs at El Teniente for the three months ended June 30, 2008. Electricity prices fell 24.7%, to $0.2462 per kilowatt hour from $0.3268, due to higher rainfall and additional hydro-electric sources. (All figures except share price in U.S. dollars.) That’s after Amerigo’s first quarter electricity costs rose 285%, to $13.9 million from $3.6 million. Amerigo has bought two 10-megawatt electricity generators in order to become energy self-sufficient. It expects these to begin generating power later this year. Labor troubles at El Teniente are now settled, but disruptions in the supply of tailings in April and May hurt Amerigo’s second quarter production. Copper production fell 28.6%, to 7.1 million pounds from 9.9 million pounds a year earlier. Molybdenum production fell 27.9%, to 147,508 pounds from 204,647 pounds. However, production should recover in the second half of 2008....

AMAZON.COM $82.52 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 417.7 million; Market cap: $34.5 billion) is the leading bookseller on the Internet (it offers 4.7 million titles), as well as a leading video and music seller. It also has numerous other store categories, including electronics, computer games, toys and tools. Through Amazon Services, the company also offers programs that let sellers market on its web sites. In the three months ended March 31, 2008, Amazon’s revenues rose 37.1%, to $4.1 billion from $3 billion. International sales comprised 48.6% of revenues and rose 44.2%, helped by stronger foreign currencies against the U.S. dollar. North American sales made up 51.4% of the total, and rose 31.1%. Earnings rose 28.8%, to $143 million or $0.34 a share, from $111 million or $0.27. Amazon holds cash of $2.2 billion or $5.16 a share....