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Despite strong Kindle sales, Amazon's fourth-quarter disappoints

January 31, 2012 |  1:55 pm
Amazon.com reports fourth-quarter earnings. Sales rose 35%, helped by strong Kindle sales, but Wall Street analysts had expected better

Despite strong sales of its Kindle devices during the holidays, Amazon.com's fourth-quarter earnings report missed expectations Tuesday, sending the online retail giant's shares plunging in after-hours trading.

The Seattle e-commerce company said its sales rose 35% year over year, to $17.4 billion for the three months ended Dec. 31. But Wall Street analysts had expected sales to rise 40%, to $18.3 billion, according to AllThingsD, which cited FactSet Research. 

Meanwhile, profit plunged 58% to $177 million, or 38 cents a share, as Amazon continued to spend heavily on development and infrastructure to support its Kindle business and other costs. That was compared with profit of $416 million, or 91 cents, in the year-earlier period. 

Amazon, which reported its results after the markets closed, saw its shares quickly fall more than 8.5%, to $177.90, in after-hours trading.

Jeff Bezos, Amazon's founder and chief executive, said "millions" of customers purchased Kindle devices over the holidays, making it the company's best-selling item in the U.S. and Europe. During the nine-week holiday period ended Dec. 31, sales of Kindle e-readers and Kindle Fire tablets increased 177% over the same period last year. The company didn't release exact device sales.

For the first quarter, Amazon projected sales of $12 billion to $13.4 billion, up 22% to 36% compared with the first quarter of 2011. 

The company will hold a live webcast at 2 p.m. PST to discuss the earnings report.

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-- Andrea Chang

Photo: Amazon's Kindle devices at a distribution center. Credit: Chris Ratcliffe / Bloomberg

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