It's become painfully obvious that Barnes & Noble's Nook business is not living up to expectations, despite a significant effort on their part to convince everyone that everything's just dandy. And it's equally obvious that, although you can't always believe everything a CEO says, Amazon is likely doing much better than Barnes & Noble.

So now there's a flurry of stories about how Amazon is just doing AWESOME with e-books, making money hand over fist!!!!

And I'm just going to take a moment to rain on this particular parade.

I am willing to take it as a given that Amazon is doing better with e-books than the other retailers. I think there's enough anecdotal evidence to back that up (although bear in mind that some book do indeed sell better at other outlets, so please don't ignore them). I also assume that selling e-books is a profitable thing for them, if only because their self-publishing rates are set up so that they are basically ensured a 35-to-65 percent profit margin.

But HOW MUCH money are they making?

Oooh, look--a pretty chart! That sure looks scientific, doesn't it? And these stories are all filled with lots of numbers! Such precision!

There's just one problem: All of the stories--ALL of them--have a single source, and that source is a report by an analyst at Morgan Stanley.

Let me tell you something about analysts: They are not psychic. It's like estimating the e-book market--it doesn't matter how much analysis you throw at something if you don't have good underlying data.

Do analysts have special access to data? Investment banks would like you to think they have. As a business reporter who covered the bursting of the dot-com bubble, I'll tell you that it really depends.

Most analysts (although not all) in my experience work hard to cover a particular industry. They tend to know the industry quite well--who are the players, what are the larger industry trends. But when it comes down to a particular company...?

The problem is that it's never in a company's best interest to air its dirty laundry. NEVER. If people don't know where the bodies are buried, it is NEVER EVER in a company's best interest to point that out to them, especially if that person is an analyst. Who reads analysts' reports? People who are trying to decide whether or not to give a particular company money! Do companies ALWAYS want money? Yes, they do!

So analysts are subject to an even bigger blizzard of PR than everybody else. If they can, they try to get information from other sources to get a more realistic picture. So, for example, if Barnes & Noble is telling you they control 27% of a market, and examining parts orders suggest that they control only 13% of a closely related market, then you as an analyst can go, Hmmm.....

The problems I see with trying to break out how much money Amazon makes from e-books are that 1. Amazon is notoriously secretive, so getting it from them would be hard; 2. if they did give you those figures, you'd have to wonder why they did and if the numbers they gave you are accurate; and 3. where's the third party you can use to verify this? The Morgan Stanley analyst is basically claiming he knows the overall size of the e-book market and the percentage of it that Amazon controls. Those are some mighty big claims to make.

And I'm not even getting into the larger question of can you believe anything Morgan Stanley says about Amazon anyway? Which is a perfectly valid concern--it's not supposed to be, but stock analysis unfortunately often is stock PR that helps the investment bank more than individual investors.