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Analyst Downgrades Amazon on Streaming

28 Feb, 2011 By: Erik Gruenwedel

Not everyone is singing praises following Amazon’s entry into the content streaming business.

U.S. Bancorp (UBS) analyst Brian Pitz Feb. 28 lowered his rating on the e-commerce behemoth’s stock to “neutral” from “buy,” claiming Amazon’s foray into streaming will cost the company millions as it attempts to catch frontrunner Netflix.

Amazon last week rolled out a streaming option with more than 5,700 TV shows and movies free to its Prime loyalty members. Membership is $79 per year, which is $17 less than Netflix’s streaming-only plan, and includes free two-day shipping on any order, and one-day shipping for $3.99 per item.

Netflix offers about 11,500 streaming titles.

Pitz, in a note to clients, said Amazon might spend as much as $250 million in expenses related to streaming rollout — which could impact earning by 41 cents per share.

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