Amazon.com has posted quarterly profit and revenue ahead of Wall Street estimates and said growth in its technology spending would slow this quarter, lifting its shares by 14 per cent.
The Internet retailer has unnerved investors with narrowing profit margins in recent quarters as it spent heavily on technology and content to improve its site, which offers everything from books and computers to diamonds and lawnmowers, and stay ahead of competitors.
Amazon said third-quarter net income fell to $19 million, or 5 cents per share, from $30 million, or 7 cents per share, a year earlier. Sales rose 24 per cent to $2.31 billion from $1.86 billion, helped by a sharp rise in sales of electronics.
But Amazon Chief Executive Jeff Bezos said operating profit margins would improve in the fourth quarter versus the third quarter, thanks to a combination of revenue growth and a slower increase in technology investment.
"The company is guiding to a pretty significant improvement in the operating margin declines that they've experienced over the past couple of quarters," said Stifel Nicolaus analyst Scott Devitt. "Amazon shares typically follow operating margins."
Other analysts were more skeptical about the long term.
Pacific Crest analyst Steve Weinstein said improved operating profit margins were to be expected over the holidays, with the surge of gift-giving. He was concerned by accelerated marketing spending.
"While the growth rates for the company are impressive, they seem to have to keep working harder and harder to get that growth," Mr Weinstein said. "It's just not clear to me that margins get better into next year."