Amazon.com has reported a drop in profit for the first quarter of this year as its investment in new businesses ate into earnings, but the online retailer's revenue forecast beat Wall Street expectations.
The company also forecast revenue for the current quarter that would beat Wall Street estimates and profit margins were in line with the company's expectations.
The company has been willing to sacrifice some profitability to win customers and build its new businesses. It has invested heavily in areas such as 'cloud computing' - which allows companies to store data on its servers - to take on rivals Google and Apple.
Amazon is also laying out money to open new distribution centres and cement its lead as the world's largest online retailer.
For the company's first quarter, which ended on March 31, revenue was $9.86 billion, above the average estimate of $9.57 billion and 38% above a year earlier.
Net profit in the quarter was $201m, or 44 cents per share - down from $299m a year earlier. That was far below the 61 cents expected by Wall Street.
The company posted an 18.2% dip in operating profit for the quarter, reflecting the costs of competing in the highly promotional retail environment, with beefed-up investment in its cloud computing services.
Operating margin, which Amazon has said is the best gauge of its profitability given the variety of items it sells, came to 3.3%, in the middle of the range it had forecast.
But Amazon expects that its investing to win market share will pay off. It forecast current-quarter revenue of $8.85 billion to $9.65 billion, above Wall Street expectations.
Amazon said it expected operating profit in the current quarter of $95m to $245m. In the same quarter last year, Amazon had operating profit of $207m.
