In late April, Amazon.com (NASDAQ: AMZN) wowed Wall Street with first-quarter earnings that topped expectations. Its first-quarter profit increased 38%, while net income jumped to 115%. The following session, Amazon shares jumped more than 25% higher, and these gains have not been given back. In fact, the stock has continued higher since this bull gap, easily into territory not seen since early 2000.

At that time, the online retailing giant looked ahead to the second quarter, projecting revenue between $2.7 billion and $2.85 billion. Tonight after the close - fresh from a wild weekend of Harry Potter fulfillment - the company will issue its earnings for the second-quarter reporting period. Analysts are expecting per-share results between 16 and 17 cents per share, a notably improvement from year-ago earnings of a nickel per share.

So are expectations inflated ahead of tonight's earnings report? Sentiment indicators don't suggest so. For one thing, short interest is near a historical high. About 23% of the equity's available float for public trading is devoted to the short side.

Analysts are cautious as well; data from Zacks indicates that just five covering brokerage firms have named Amazon a "buy," leaving eight "holds" and four "sells," three of which are of the "strong" variety. From a contrarian perspective, this lack of love from Wall Street could be a good thing, as it suggests muted expectations ahead of Amazon's earnings report this evening. Another positive surprise may elicit an upgrade or two from this skeptical bunch.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

(Scholastic Press, NYSE: SCHL)'s Harry Potter won't rank on the New York Times (The New York Times Company (NYSE: NYT))' best sellers list. You might wonder how could that could possibly be true. It's simple. In a move which is said to have been a knee-jerk reaction to complaints by the sellers and publishers of more "serious" books, The New York Times banished "children's books" to a secondary list of their own, thus clearing the Harry Potter series from its ownership of three spots within the top fifteen positions on best sellers lists. That was supposedly to open those spots for occupancy by more deserving titles.

How yawn inspiring is that? We all know just how well those Harry Potter books have sold. What the whole thing signals to me is that the book watchers of The New York Times were just too stupidly motivated to stop and think that the Potter-displacing category change would only further instill the obviousness of their palpable impertinence.

The Harry Potter books don't need The New York Times, they never did and they never will. As a matter of fact, good literature never needed the Times. The Harry Potter books made J.K.Rowling the wealthiest author on the planet by virtue of Harry's own magic. Frankly, the Times and their top ten list had little to say about that.

More Harry Potter news

Tom Barlow: The Harry Potter Finance Quiz
Tom Barlow: Harry Potter ending: A water cooler cheat sheet
Zac Bissonnette: With Harry Potter done, is it time for Scholastic to sell itself?
Tom Barlow: Rowling safeguards Potter empire
Zac Bissonnette: Is the last book the end of Potter mania?
Tom Barlow: Harry Potter and the Pots of Gold
Barry Summerlin: Harry Potter doesn't even need Muggle marketing
Julie Tilsner: Not even Harry can save bookstores from their fate
Peter Cohan: Harry Potter and the Pot of Gold
Tom Barlow: Harry Potter and the Deathly Hallows: Will Rowling kill off Harry?

For those of you who want to take part in the Harry Potter (Scholastic Press, NYSE: SCHL) water cooler chatter but don't have the time to plow through Harry Potter and the Deathly Hallows, we have prepared this summary:

The last novel of the series covers the culmination of Harry's war with the evil Lord Voldemort. The story begins with the servants of Voldemort overwhelming the forces of good magic, taking over the Ministry of Magic and Hogwarts, where longtime evil ally Snape is placed in charge.

Harry and his friends Ron and Hermione are forced to go on the run to hide from Voldemort, whose single greatest ambition is to kill Harry, the only person who can destroy him.

It might seem hard to imagine, but the success of the Harry Potter franchise over the past decade has done little to bolster the fortunes of its publisher, Scholastic (NASDAQ: SCHL). With a market cap of $1.4 billion, the company may not be worth much more than the book's author J.K. Rowling.

But with Harry Potter on the way out as a huge source of income (although residual sales will, of course, continue to be strong), Bloomberg believes that the company "may face an exodus of shareholders if the company doesn't consider selling itself."

The stock looks cheap at .66 times sales the Bloomberg piece quotes analyst Drew Crum saying that shares could be worth a 48% premium to their current price if the company is sold.

But that means nothing if management doesn't want to sell, and CEO Richard Robinson controls the company through his ownership of Class A shares.

The most appalling quote from the Bloomberg piece is here:

Robinson, whose father Maurice founded the company in 1920, ``is not a seller,'' Chief Financial Officer Maureen O'Connell said in an interview. Through its ownership of Class A shares, the Robinson family controls four-fifths of Scholastic's board.

``I don't think Dick's going anywhere,'' O'Connell said. ``He's having too much fun right now.''

If Mr. Robinson wants to run the company for fun rather than the benefit of minority shareholders, he should take the company private himself.

Keep a close on this stock. If Scholastic continues to stumble, Robinson could face pressure to do the right thing and enhance shareholder value.

More Harry Potter news

Tom Barlow: The Harry Potter Finance Quiz
Gary E. Sattler: New York Times bestseller list leaves Harry Potter out
Tom Barlow: Harry Potter ending: A water cooler cheat sheet
Tom Barlow: Rowling safeguards Potter empire
Zac Bissonnette: Is the last book the end of Potter mania?
Tom Barlow: Harry Potter and the Pots of Gold
Barry Summerlin: Harry Potter doesn't even need Muggle marketing
Julie Tilsner: Not even Harry can save bookstores from their fate
Peter Cohan: Harry Potter and the Pot of Gold
Tom Barlow: Harry Potter and the Deathly Hallows: Will Rowling kill off Harry?

Amazon.com Inc. (NASDAQ: AMZN) opened at $71.78. So far today the stock has hit a low of $70.85 and a high of $72.67. As of 11:00 this morning, AMZN is trading at $71.30, down $0.33 (-0.5%).

The stock began a sharp climb in mid-spring this year, reaching a one-year high of $75.35 earlier this month before meeting resistance. The stock is shaky this morning with tomorrow's earnings release on the horizon, and reports of the final tally of Harry Potter pre-orders are not helping matters. The seventh and final book in the series broke Amazon's previous pre-order record (set by the sixth book) of 1.5 million copies, with pre-orders reaching 2.2 million copies as of midnight July 20. However, it looks like investors and analysts were looking for a bit more from the boy wizard. Technical indicators for AMZN are bullish but deteriorating, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $85 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk and leverage returns. For this particular trade, we will make an 8.7% return in just one month as long as AMZN is below $85 at August expiration. AMZN would have to rise by 19% before we would start to lose money.

AMZN has not been above $75.35 at all in the past year and has shown resistance around $73.50 recently. This trade could be risky if the company's earnings are a positive surprise, but after a big gain like AMZN had in April, it would be tough for the stock to rise by another 19% in the next month.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in AMZN.

More Harry Potter news

Tom Barlow: The Harry Potter Finance Quiz
Gary E. Sattler: New York Times bestseller list leaves Harry Potter out
Tom Barlow: Harry Potter ending: A water cooler cheat sheet
Zac Bissonnette: With Harry Potter done, is it time for Scholastic to sell itself?
Tom Barlow: Rowling safeguards Potter empire
Zac Bissonnette: Is the last book the end of Potter mania?
Tom Barlow: Harry Potter and the Pots of Gold
Barry Summerlin: Harry Potter doesn't even need Muggle marketing
Julie Tilsner: Not even Harry can save bookstores from their fate
Peter Cohan: Harry Potter and the Pot of Gold
Tom Barlow: Harry Potter and the Deathly Hallows: Will Rowling kill off Harry?

Spoiler alert – if you have not yet read the conclusion to the Harry Potter saga, Harry Potter and the Deathly Hallows, you may want to skip this post, in which the ending is discussed.

For companies such as publisher Scholastic Corp. (NASDAQ:SCHL), the US publisher of the books, Time Warner (NYSE:TWX), whose Warner Brothers Studios produces the hugely profitable Harry Potter movies, and General Electric's (NYSE:GE) Universal Studios, which will open a Harry Potter theme park in 2009, the seventh and final Harry Potter book must have come as a great relief.

Despite rumors to the contrary, the title character did not die, and thereby cast a pall on the series and its offshoots. Rather, as I expected, Harry prevailed, and in general the core cast lived happily ever after. Even Snape, as I predicted, achieved redemption, but at a mortal cost.

In the coda to the novel, Harry Potter and his wife, the former Ginny Weasley, watch their children depart for Hogwarts. Also placing their children on the Hogworts train are Harry's best friends, the married couple Ron Weasley and Hermoine Granger.

This final scene, nineteen years after the climax of the book, will no doubt inspire a great deal of conversation, as it keeps open a couple of possibilities for future novels in the Potter universe. Harry is still young enough to have more adventures, perhaps as he takes on the role of the era's greatest wizard, much as Albus Dumbledore was in Potter's youth. Rowling could also, should she decide to continue the series, reboot the series with the next generation of Hogwarts students.

I don't expect her to return to the Potter storyline for a long time, if ever, but the lure will always be there; a huge, thirsty audience ready to demonstrate their devotion with their pocketbooks.

More Harry Potter news

Tom Barlow: The Harry Potter Finance Quiz
Gary E. Sattler: New York Times bestseller list leaves Harry Potter out
Tom Barlow: Harry Potter ending: A water cooler cheat sheet
Zac Bissonnette: With Harry Potter done, is it time for Scholastic to sell itself?
Zac Bissonnette: Is the last book the end of Potter mania?
Tom Barlow: Harry Potter and the Pots of Gold
Barry Summerlin: Harry Potter doesn't even need Muggle marketing
Julie Tilsner: Not even Harry can save bookstores from their fate
Peter Cohan: Harry Potter and the Pot of Gold
Tom Barlow: Harry Potter and the Deathly Hallows: Will Rowling kill off Harry?

So that's all folks. The last Harry Potter book has dropped and more than a few of you will have already finished the book by the time you read this. This leads to an important (or at least interesting) question: Will the Potter profits continue to role in absent new books? I think that they will: Harry Potter has been a hit of mammoth proportions. No one else has ever come close, and the books have a timeless quality. They will be read by future generations with the same vigor with which we have attacked them. New Harry Potter movies will keep the name in the news for years to come, and video games and other Potter spin-offs will emerge -- a Harry Potter Saturday morning cartoon perhaps? Hey, it couldn't be worse than Hammerman, the cartoon starring M.C. Hammer.

But the Financial Times's Peter Aspden has an even bolder prediction. Citing the returns of stars like Sherlock Holmes, Superman, and the Lord of the Rings, he sees the "eighth book in the series coming out some time in 2030s ... I'm sure J.K Rowling has it in her to write the definitive novel of mid-life crisis."

I too suspect we haven't heard the last of Mr. Potter, but it could depend on several factors. If J.K. Rowling decides to go and write other books and they're poorly-received, we could see his return sooner. As much as the notoriety of Harry-mania may be getting to her, she may prefer it to being panned for her efforts to write "grown-up" books.

Even if she does have success, she will have to get nostalgic for Harry Potter at some point, won't she? And Aspden's prediction of 2030 may not be far off the mark.

More Harry Potter news

Tom Barlow: The Harry Potter Finance Quiz
Gary E. Sattler: New York Times bestseller list leaves Harry Potter out
Tom Barlow: Harry Potter ending: A water cooler cheat sheet
Zac Bissonnette: With Harry Potter done, is it time for Scholastic to sell itself?
Tom Barlow: Rowling safeguards Potter empire
Tom Barlow: Harry Potter and the Pots of Gold
Barry Summerlin: Harry Potter doesn't even need Muggle marketing
Julie Tilsner: Not even Harry can save bookstores from their fate
Peter Cohan: Harry Potter and the Pot of Gold
Tom Barlow: Harry Potter and the Deathly Hallows: Will Rowling kill off Harry?

BloggingStocks's Tom Barlow is pretty sure that Harry Potter isn't about to meet his untimely demise, but a lof of gamblers aren't so sure: According to Bloomberg, "William Hill Plc, a London-based bookmaker, closed bets on Harry sacrificing himself at 2/5 odds on July 17, cut from an original quote of 33/1 in early July. Lord Voldemort, who murdered Potter's parents, is at 9/4 to kill Harry, and Professor Severus Snape is at 4/1 odds to murder him. The bookmaker took more than 50,000 pounds ($100,000) in bets on Harry's fate, the first time in the company's history it had ever bet on a book."

This seems kind of inane: People are gambling about what will happen in a fictional story that they haven't read yet, and only the author and a few insiders know what's going to happen in the latest Harry Potter, set to be released tomorrow.

But maybe others really do know? There have been reports of pirated copies showing up on the internet and The New York Times and Baltimore Sun have already gotten copies, reportedly through bookstores.

The strong odds that gamblers are assigning to the death of Harry combined with a general belief in the wisdom of crowds lead me to a conclusion: By this time tomorrow, millions of bookworms will be mourning Harry's passing.

More Harry Potter news

Tom Barlow: The Harry Potter Finance Quiz
Gary E. Sattler: New York Times bestseller list leaves Harry Potter out
Tom Barlow: Harry Potter ending: A water cooler cheat sheet
Zac Bissonnette: With Harry Potter done, is it time for Scholastic to sell itself?
Tom Barlow: Rowling safeguards Potter empire
Zac Bissonnette: Is the last book the end of Potter mania?
Tom Barlow: Harry Potter and the Pots of Gold
Barry Summerlin: Harry Potter doesn't even need Muggle marketing
Julie Tilsner: Not even Harry can save bookstores from their fate
Peter Cohan: Harry Potter and the Pot of Gold
Tom Barlow: Harry Potter and the Deathly Hallows: Will Rowling kill off Harry?

In the run up to this weekend's release of the seventh and final book in the Harry Potter series, Harry Potter and the Deathly Hallows, I stand in awe at the product of J.K. Rowling's imagination. She didn't strike oil, or invent a new telephone, or learn to sink a corner jumper. She created an industry with only the vision in her mind.

From the first pencil scratches of a penniless mother in 1996, her created world has grown to what Advertising Age estimates is now a $15 billion business. Even better, I see this as a business with a very long tail, as the millions of readers, many of them adolescents, will canonize the series and lovingly share it with their own children.

Time will tell how big of an impact this makes but, for now, booksellers might want to be afraid. According to the Wall Street Journal: "Photographed pages allegedly from the highly anticipated final book in J.K. Rowling's Harry Potter series were flooding Internet file-sharing services and other sites yesterday, including the photo-sharing service Flickr and the video site YouTube."

Scholastic (NYSE: SCHL) won't say whether any legitimate copies of the book have been found online, but did say several were fake. Allegedly pirated copies were also found on BitTorrent.

While this is unlikely to have a material impact on book sales for now, you have to wonder: Are the problems facing music companies related to piracy likely to spread into the publishing industry?

It seems likely that they could, eventually. It will take longer than music because music can be illegally downloaded without substantially changing the listening experience. That's not true for books right now, but will technological advances make it so?

More Harry Potter news

Tom Barlow: The Harry Potter Finance Quiz
Gary E. Sattler: New York Times bestseller list leaves Harry Potter out
Tom Barlow: Harry Potter ending: A water cooler cheat sheet
Zac Bissonnette: With Harry Potter done, is it time for Scholastic to sell itself?
Tom Barlow: Rowling safeguards Potter empire
Zac Bissonnette: Is the last book the end of Potter mania?
Tom Barlow: Harry Potter and the Pots of Gold
Barry Summerlin: Harry Potter doesn't even need Muggle marketing
Julie Tilsner: Not even Harry can save bookstores from their fate
Peter Cohan: Harry Potter and the Pot of Gold
Tom Barlow: Harry Potter and the Deathly Hallows: Will Rowling kill off Harry?

Boarding a train into Manhattan on Monday night, I found myself in a seat (rare in itself) across from an Oxford-wearing twenty-something engrossed in Harry Potter and the Order of the Phoenix, the fifth tale in the series, released just last week in theaters. Aside from checking the stops occasionally, he never looked up from his book.

Shortly later I transferred trains; a woman, maybe 50, sat down across from me. She too pulled out a book -- Harry Potter and the Prisoner of Azkaban, Potter's third book.

Potter's ubiquity reminds this Muggle of critic Chuck Klosterman's notes on the death of Johnny Carson and the popular notion that there could never be another Carson, who in his day had such a wide and total grasp on the nation. Klosterman argued that of course there could be another Carson, except that through the fragmenting and stratification of popular culture -- augured by the niche channels of cable television, taken to extremes by the internet -- we have instead chosen to retreat into cultural cliques, limiting common experience to -- what? Devastating acts of terror, I guess.

As I recall, Outkast's massive 2003 hit song "Hey Ya!" was the closest thing Klosterman could propose as a unifying cultural force (not without his reservations), but he might have overlooked J.K. Rowling's little wizard. Who since maybe The Beatles has met this sort of worldwide fanfare with each new offering? Publisher Scholastic (NASDAQ: SCHL) is delivering a record-breaking first-print run of 12 million U.S. copies to meet demand -- that's a copy of Harry Potter and the Deathly Hallows for every ninth household.

Even with magic as strong as Harry Potter's, Publisher's Weekly reported today that bookstore sales continued to fall for the fifth consecutive month. According to the U.S. Census bureau, sales in May were down 4.3%, to $1.10 billion.

However, bookstore sales totaled $6.20 billion in the period between January and May. The retail segment in total saw sales up 5.6% in May, and were ahead 4.1% for the first five months of 2007.

How does that jibe with Harry Potter and the Deathly Hallows, the latest (and last) Potter tome selling an unprecedented nine million copies in the U.S. and Britain in its first 24 hours of release? Well it's all good, everyone agrees, compelling millions of kids to lay aside their Nintendo for the week and venture into bookstores. But as Sara Nelson, editor-in-chief of Publishers Weekly recently wrote, there are still some problems in the numbers.

"Take, for example, the retailers, big and small. The former have made the dubious choice to discount HPATDH so drastically that even they admit their revenue – on the most popular book in history! – will be down this year. The latter can't begin to compete with the economies of scale and some may bypass their distributors and buy direct – at nearly the same discount – from Amazon or Costco."

A piece on Bloomberg offers a similarly dark assessment, suggesting that Big-box retailers like Costco Wholesale Corp. (NASDAQ: COST) and Sam's Club (A division of Wal-Mart Stores, Inc. (NYSE: WMT) discount the book so deeply as to use it as more a customer draw then a revenue-booster. In the meantime, independent bookstores that can't afford to discount this most popular literary offering in history must resort to any tactic they can to draw customers in, including hosting Potter parties, and other community-building schemes.

I have another idea for keeping small booksellers and their particular brand of magic alive. Maybe every wealthy best-selling author (and Oprah, who's responsible for creating a few) could each sponsor an independent bookstore. Surely it's not too much to ask from someone who probably spent the better part of their youths perusing the musty stacks. Besides, what's J.K. Rowling got to do these days?

More Harry Potter news

Tom Barlow: The Harry Potter Finance Quiz
Gary E. Sattler: New York Times bestseller list leaves Harry Potter out
Tom Barlow: Harry Potter ending: A water cooler cheat sheet
Zac Bissonnette: With Harry Potter done, is it time for Scholastic to sell itself?
Tom Barlow: Rowling safeguards Potter empire
Zac Bissonnette: Is the last book the end of Potter mania?
Tom Barlow: Harry Potter and the Pots of Gold
Barry Summerlin: Harry Potter doesn't even need Muggle marketing
Peter Cohan: Harry Potter and the Pot of Gold
Tom Barlow: Harry Potter and the Deathly Hallows: Will Rowling kill off Harry?

Leading textbook publisher Houghton Mifflin has agreed to pay $4 billion for the Harcourt Education, Harcourt Trade and Greenwood-Heinemann divisions of Reed Elsevier. The deal creates a textbook powerhouse, as it combines two of the leaders in market-share into one entity. With textbook prices already spiraling out of control, this may not bode well for students. Less competition has a way of leading to higher prices.

But if Houghton Mifflin is in a buying mood, I have an idea for them: Scholastic Corporation (NASDAQ: SCHL), the world leader in children's books with its Harry Potter series leading the charge. Many readers probably have fond memories of the quarterly book orders, when the teacher walked into the room carrying a big red and white box, as our class cheered, eagerly awaiting the Boxcar Children or Baby Sitter's Club book our parents had ordered for us.

The acquisition of Scholastic would probably come with a lot of cost-cutting options, as the distribution channels are similar. Shares of Scholastic have been stagnant for a decade, and not even Harry Potter has been able to send the company to new highs. They probably ought to start considering strategic alternatives soon, and the company's solid profitability could make it an interesting target for a strategic buyer.

With a $44.8 million day, Harry Potter and the Order of the Phoenix set a new record for Wednesday premieres. Twelve million copies of Harry Potter and the Deadly Hallows are flying off the presses of Scholastic Corp.'s (NASDAQ:SCHL) Scholastic Press in preparation for its release at midnight on July 21.

On Bloggingstocks, we usually talk about companies first, products second, but J. K. Rowling's Harry Potter series has flipped that upside down like Malfoy on the receiving end of a Hermione spell. The books and movies have a huge impact on the bottom line of companies such as Time Warner Inc. (NYSE:TWX), Scholastic Press, Amazon.com (NASDAQ:AMZN) and even eBay Inc. (NASDAQ:EBAY), and this summer's buzz is going to certainly help the year-end totals.

The question most of them will struggle with is, what next?

More Harry Potter news

Tom Barlow: The Harry Potter Finance Quiz
Gary E. Sattler: New York Times bestseller list leaves Harry Potter out
Tom Barlow: Harry Potter ending: A water cooler cheat sheet
Zac Bissonnette: With Harry Potter done, is it time for Scholastic to sell itself?
Tom Barlow: Rowling safeguards Potter empire
Zac Bissonnette: Is the last book the end of Potter mania?
Tom Barlow: Harry Potter and the Pots of Gold
Barry Summerlin: Harry Potter doesn't even need Muggle marketing
Julie Tilsner: Not even Harry can save bookstores from their fate
Peter Cohan: Harry Potter and the Pot of Gold
Tom Barlow: Harry Potter and the Deathly Hallows: Will Rowling kill off Harry?

Maybe at 39, I am too old and cynical to fall under the spell of Harry Potter. Maybe my nine-month-old son will one day become a fan of the teenage wizard. Until then, I shall avoid all Potter books and movies even though I am one of the few people on the planet to do so.

Harry Potter and the Order of the Phoenix, the latest chapter in the J.K. Rowling franchise, grossed $44.8 million yesterday, the biggest Wednesday ever, according to Reuters. That's good news, of course, for Time Warner Inc. (NYSE: TWX), the film's producer and distributor.

The movie even got a backhanded compliment from A.O. Scott of the New York Times who wrote; "Although Order of the Phoenix is not a great movie, it is a pretty good one, in part because it does not strain to overwhelm the audience with noise and sensation."

But investors shouldn't buy shares of the New York-based media company just because of one hit movie. Remember that blockbuster movies are extremely expensive to produce, though the power of Potter continues to amaze me.

Since 2001, the Potter saga movies have generated $3.5 billion in ticket sales. What they haven't done though, is reverse the decline in reading, the Times also notes.

There are some things beyond the powers of the greatest wizards.

More Harry Potter news

Tom Barlow: The Harry Potter Finance Quiz
Gary E. Sattler: New York Times bestseller list leaves Harry Potter out
Tom Barlow: Harry Potter ending: A water cooler cheat sheet
Zac Bissonnette: With Harry Potter done, is it time for Scholastic to sell itself?
Tom Barlow: Rowling safeguards Potter empire
Zac Bissonnette: Is the last book the end of Potter mania?
Tom Barlow: Harry Potter and the Pots of Gold
Barry Summerlin: Harry Potter doesn't even need Muggle marketing
Julie Tilsner: Not even Harry can save bookstores from their fate
Peter Cohan: Harry Potter and the Pot of Gold
Tom Barlow: Harry Potter and the Deathly Hallows: Will Rowling kill off Harry?