Amazon is widely expected to post strong (fourth-quarter) revenue, but margins may be more of an issue. Intense price competition, technology investments and increased shipping cost subsidization may create an uninspiring 4Q report.

They may take the $30 rise in the stock price as an unexpected end of quarter bonus. It helps a lot of portfolios. But in order to book that gain, they'd have to sell into the strength.

Our estimate for fourth quarter product revenue is approximately $1 billion. To achieve our estimate, we believe Amazon has to book about $750 million in the eight week holiday season. Our back-of-the-envelope analysis of the Delight-O-Meter suggests it is off to a solid start.

Disappointing gross margins muted fourth-quarter results.

Margins and revenue were better than feared. Inventories did go up as we expected but they basically are not far off from where they were last year.

Amazon looked pretty strong on sales although gross margins and operating expense were somewhat lower than expected.