By ALLISON LINN AP Business Writer
SEATTLE Oct 24, 2006 (AP)— Internet retailer Amazon.com Inc. said Tuesday its third-quarter earnings fell by a third, but the company still managed to beat analysts' expectations and its shares surged nearly 12 percent in after-hours trading.
The Seattle-based company reported net income of $19 million, or 5 cents per share, for the three months ended Sept. 30. That compares with earnings of $30 million, or 7 cents per share, in the same period a year earlier.
Sales for the quarter rose 24 percent to $2.31 billion, from $1.86 billion in the same quarter last year. The company said sales would have grown by 23 percent if it had not benefited from foreign exchange rate changes.
Analysts polled by Thomson Financial were expecting earnings of 3 cents per share on average, on revenue of $2.25 billion.
Amazon.com shares rose 75 cents, or 2.28 percent, to close at $33.63 in trading Tuesday on the Nasdaq Stock Market. The company reported earnings after the markets closed. In after-hours trading, shares were up another $4.
In a conference call with journalists, Chief Financial Officer Tom Szkutak said lower prices and expanded selection helped drive sales growth beyond expectations.
Szkutak said the drop in earnings was partly because the company continued to invest in content and technology during the quarter. Amazon.com has launched several new initiatives lately, including the Amazon Unbox digital video download service, amid efforts to counter an ever-growing group of online competitors.
Szkutak said the online retailer also has been working on other improvements to the customer experience on its Web site.
Amazon.com also narrowed its sales guidance for the full year. The company said it expects to see sales for the 12-month period to be between $10.35 billion and $10.68 billion, compared to previous guidance of between $10.15 billion and $10.65 billion.
For the all-important fourth quarter, in which sales are fueled by holiday spending, the company is expecting sales of between $3.63 billion and $3.95 billion.