Amazon exceeds analysts’ estimates

AMAZON.COM, the world’s largest online retailer, reported profit and sales that beat analysts’ estimates after its Kindle e-reader and digital-media services helped fuel growth. The shares jumped in late trading.

Second-quarter net income was $191 million (€131m), or 41 cents a share, compared with $207m, or 45 cents, a year earlier, the Seattle-based company said last night. That compared with 34 cents that analysts predicted. Net sales rose to $9.91 billion, compared with the $9.38bn projection.

Chief executive Jeff Bezos has invested in online entertainment services and opened distribution centres to increase growth. Sales of the Kindle electronic reader also accelerated last quarter as more consumers shifted to digital books.

While the company’s spending is weighing on profit margins, investors are heartened by the surging revenue, said Colin Sebastian, an analyst at Robert W Baird in San Francisco.

“We’re seeing continued robust revenue growth, better than expected,” he said. Sebastian has an “outperform” rating on the stock, which he doesn’t own.

“Amazon is running on all cylinders, despite the pressure on its margins,” he said.

Amazon rose as much as 6.9% to $228.99 in late trading after the report. The shares, up 19% this year, had closed at $214.18 on the Nasdaq Stock Market.

The company said forecast operating profit will be $20m to $170m this quarter. Sales will be $10.3bn to $11.1bn. The outlook included $180m in stock- based compensation and the writedown of intangible assets.

Analysts had estimated operating income of $311.7m and revenue of $10.4bn.

Amazon will spend about $900m this year as part of its effort to expand warehouses and data centres, according to January estimates from James Mitchell, an analyst at Goldman Sachs Group.

The company plans to open a logistics hub in Britain that will create more than 900 jobs by the end of 2012.

The online retailer has fought attempts by California, New York, Texas, Rhode Island and North Carolina to force it to collect sales taxes on purchases, saying the moves infringe on federal jurisdiction.

Amazon competitor eBay reported a drop in second- quarter profit last week, citing acquisition expenses. Its sales topped analysts’ estimates.