Amazon Profits Better Than Expected, But Outlook Worries Wall Street

Authored by Jay Baage on October 23, 2007 - 2:15pm.

Seattle - The online retailer Amazon.com (NSDQ: AMZN) reported on Tuesday that profits skyrocketed on strong sales in the third quarter. However, the company's shares fell sharply in after-hours trading due to worries about its expected profit margins for the crucial holiday sales period.

Amazon reported third quarter net income of $80 million, or 19 cents a share, up from $19 million, or 5 cents a share, a year ago. Revenue for the quarter ended Sept. 30 was up 41 percent from a year ago to $3.26 billion.

Amazon shares have more than doubled in the last six months, in a period which the company benefited from the release of the last Harry Potter book, which the company described as its largest new product release, with 2.5 million copies sold.

The company has also launched a public beta of the Amazon MP3 music store as well as selling video downloads through its Unbox digital-download store. Amazon's digital media moves have put the company in direct competition with Apple’s (NASQ: AAPL) iTunes music and video store. However, the company did not break out any results for the digital media services.

The Amazon stock surged more than 9% to top the $100 mark during the regular session, but fell off after the report due to concerns about future margins, dropping nearly 8% in after-hours trading to $92.92.

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