Amazon posts double profit for 4Q

Amazon.com Inc., the world's largest Internet retailer, Wednesday posted fourth quarter earnings that were more than double owing to strong holiday sales but the slight slid in fourth- quarter profit margins disappointed the investors leading to a drop in shares.

Net income for the quarter was $207 million, or 48 cents a share, compared with $98 million, or 23 cents a share, in the same quarter a year ago. Sales went up 42% to $5.67 billion from $3.99 billion a year earlier as international sales outpaced U.S. sales.

The fourth quarter is usually the strongest due to the critical holiday shopping season.

“This quarter showed accelerated sales growth and record operating profits,” Jeff Bezos, the chief executive, said in a statement released with the earnings. “In our view, these unusual financial results are driven by one thing: continuously improving the customer experience.”

Prior to the announcement of earnings, shares had gained 26 cents to close at $74.21 but later they plunged as much as 12% in after-hours trading to $65.29.

Amazon’s gross margin fell in the fourth quarter to 20.6 percent from 21.3 percent, a year ago. Profit margins in the quarter contracted because of lower prices and changes in the types of products sold, Chief Financial Officer Thomas Szkutak said yesterday in a conference call.

The company forecasts full-year operating income between $785 million and $985 million on sales of between $18.8 billion and $19.8 billion, which would reflect as a revenue gain of 33 percent. Analysts, however, have estimated operating profit of $1.18 billion on revenue of $18.2 billion.

Operating income for the first quarter is anticipated by the company to be $155 million to $200 million on sales of at least $3.95 billion. Analysts project operating profit of $253.7 million.