Amazon profits surge on Kindle

Online retailer Amazon

Online retailer Amazon.com has posted quarterly profit that easily beat Wall Street estimates and said holiday sales could come in far above expectations.

The world's largest online retailer also said its Kindle electronic reader was its top item in both unit sales and dollars across all of its product categories.

For the key holiday fourth quarter, Amazon said it sees revenue to range between $8.125 billion and $9.125 billion, compared with analysts' expectations for $8.13 billion.

The company forecast operating profit between $300 million and $425 million.

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Amazon's net profit in its third quarter was $199 million, or 45 cents per share, far above the average analyst estimate of 33 cents per share according to Thomson Reuters I/B/E/S. Year-ago profit was $118 million, or 27 cents per share.

Revenue rose 28 per cent to $5.45 billion, the Seattle-based company said, compared to the Wall Street average estimate of $5.03 billion.

"The profit you see is really driven by the leverage we got from our strong revenue growth," said chief financial officer Tom Szkutak. "We had very strong demand across categories and geographies."

Amazon has been rolling out new incentives to spur sales ahead of the holidays. Amazon has cut its prices on top pre-ordered hardback books to $8.99, following the aggressive lead of Walmart.com.

Yesterday, the American Booksellers Association asked the US Department of Justice to investigate that online book price war involving Amazon, Walmart.com and Target, calling it "illegal predatory pricing" damaging to the book industry.

To maintain its dominance in e-readers, Amazon cut the price of its Kindle to $259 from $299 and introduced a global version.

Asked whether Amazon would again lower the Kindle price before the holidays, Mr Szkutak said the company was comfortable with the current price and would not comment on future plans.

Still, Amazon's Kindle faces its first major challenge with the debut this week of Barnes & Noble's Nook. That device is priced the same as Amazon's and offers features that may take market share from the online retailer.

Amazon recently bought online shoe retailer Zappos.com to venture further into footwear and apparel, and introduced same-day shipping in seven major US cities.

In North America, sales rose 23 per cent in the quarter, while internationally sales grew 33 per cent, the company said.

Media sales, which had shown slowing growth in the previous quarter, rose a healthy 13 per cent in North America. They had risen a mere 1 per cent in the second quarter.

Shares -- which are up 82 per cent since January -- rose nearly 15 per cent to $107.33 in after-hours trade.

Reuters