Amazon shares plunged in after-hours trading last night as the online retail giant said net profit fell sharply in the third quarter and provided a weak outlook for the holiday period.
Shares in the Seattle-based company shed 12.7% after Amazon released its earnings for the quarter that ended on September 30. Amazon said net profit declined 73% to $63m in the third quarter compared to the same quarter a year ago.
Amazon sharply increased spending in the quarter as it invested in the Kindle Fire, its rival to Apple's iPad, digital content, and infrastructure projects.
Earnings per share of 14 cents were well below the 24 cents per share expected by Wall Street analysts. Revenue was up 44% to $10.88 billion, slightly below the $10.93 billion forecast by analysts.
Amazon said it expected revenue of between $16.45 billion and $18.65 billion in the current quarter, less than the average $18.10 billion expected by analysts for the months which includes the key Christmas period.
Amazon founder and chief executive Jeff Bezos emphasised sales of the Kindle electronic book reader and the new Kindle Fire tablet computer introduced last month.
Amazon unveiled three new Kindle e-readers and the Kindle Fire, its rival to Apple's hot-selling iPad, on September 28. The Kindle Fire is less than half the price of the cheapest iPad, and will start selling in the US on November 15.
"September 28 was the biggest order day ever for Kindle, even bigger than previous holiday peak days," Bezos said. "In the three weeks since launch, orders for electronic ink Kindles are double the previous launch," he said.
"Based on what we're seeing with Kindle Fire pre-orders, we're increasing capacity and building millions more than we'd already planned," Bezos added.
Amazon does not release actual sales figures for the Kindle. It said North America sales increased 44% to $5.93 billion in the quarter compared to the same quarter last year while international sales were also up 44% at $4.94 billion.
