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How delightful are


(AMZN) - Get Amazon.com, Inc. Report

fourth-quarter sales going to be, given that its holiday Delight-O-Meter seems to have disappeared?

In the fall of 2000, the Web retailer rolled out the Delight-O-Meter, a device that famously tracked the number of items ordered during the lucrative holiday season. Despite its silly name and the approximate nature of the data, investors liked the counter.

Bulls loved pointing at the huge numbers being rung up by the company's many customers; others saw their only chance to get a fix on Amazon's actual units sold -- a key data point for any in-depth analysis. (Amazon sometimes releases unit growth, but not the amount of absolute units.)

So it was a bit of a letdown to see the

Seattle Times

report Monday that Amazon may have decided to pull the Delight-O-Meter. In past years it would have been up and running on Amazon's site by now -- it typically ran from November through Christmas Eve -- but for the moment it's nowhere to be found. Amazon would neither confirm nor deny that the Delight-O-Meter has been discontinued.

In any case, investors should be suspicious of the Delight-O-Meter's disappearance. With Amazon's stock trading at nearly three times its 52-week low and a lunatic 85 times 2003 projected earnings, it is absolutely critical that Amazon excel during this fourth quarter.

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The absence of the Delight-O-Meter could mean that unit-sales growth is sluggish compared to last year, and the company obviously wants to avoid investors seeing that. When asked if the absence of the Delight-O-Meter meant Amazon is producing disappointing unit-sales growth so far this quarter, a spokesman said that Amazon has always warned that the Delight-O-Meter shouldn't be used to predict the company's financial results.

Another reason Amazon may have yanked the Delight-O-Meter is that it can be used to help analyze the true profitability of the company's main business, which is selling goods directly from its own inventory (as opposed to acting as an intermediary for a third-party seller and collecting a fee). Detox concluded

last month that gross profit margins on Amazon's direct-sales business were shrinking.

To arrive at that conclusion, Detox used the Delight-O-Meter's unit numbers to get a rough approximation for the average selling price per unit, which is an integral part of profitability calculations. The margin of the direct-sales business can still be estimated -- and Detox will have another crack at the exercise when fourth-quarter numbers are released -- but the loss of the Delight-O-Meter would make it harder to cross-check certain estimates.

While Amazon's stock is pricing in only good things, it would be no surprise if the fourth quarter turned out to be something of a disappointment. After all, the company

issued weak earnings guidance for 2004 when it released third-quarter earnings. One way that Amazon has been boosting sales is through free shipping, which looks

inherently uneconomical.

The Seattle company seems also to have boosted earnings artificially -- by

tweaking balance sheet items. If free shipping is scaled back and if the company can't get more of an earnings boost from balance-sheet maneuvers, its profitability will suffer.

At the very minimum, the yanking of the Delight-O-Meter would signal that, while Amazon may offer Earth's Biggest Selection, its financial disclosure is getting skimpier.

In keeping with TSC's editorial policy, Peter Eavis doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback and invites you to send any to