Amazon's stock soars on better-than-expected results

Amazon.com's stock shot up 17.6 percent today after it delivered something rare for a retailer these days — good news.

The Seattle Internet giant reported a fourth-quarter profit Thursday that beat Wall Street's expectations and predicted strong sales for the first quarter. The results, announced after the market closed, catapulted the stock up $8.82 to $58.82 today

Amazon previously said the 2008 holiday season was its "best ever," and Thursday's report confirmed that it's not being terribly hurt by a pullback in consumer spending.

For the three months that ended Dec. 31, Amazon made a profit of $225 million, or 52 cents a share, up from $207 million, or 48 cents a share, a year ago. Analysts polled by Thomson Reuters expected a per-share profit of 39 cents.

Amazon's sales also exceeded expectations, rising 18 percent to $6.7 billion. Sales would have increased as much as 24 percent if not for the strengthening U.S. dollar, which diminished the value of sales in other currencies.

For the full year, sales jumped 29 percent to $19.17 billion, pushing Amazon's profit up 36 percent to $645 million.

The report bucked a widespread trend toward dismal holiday-sale results. Many retailers describe the season as the worst in several decades, saying they had to discount more deeply than planned to lure cash- and credit-strapped consumers.

If the recession showed up anywhere in Amazon's report, it would be in a gross-profit-margin decline to 20.1 percent from 20.6 percent a year ago. Chief Financial Officer Tom Szkutak told reporters in a conference call that the drop could be attributed to price cuts.

Amazon "did feel some pressure in terms of pricing, but it wasn't nearly as much as I or others expected," said Dan Geiman, who follows Amazon as an analyst with McAdams Wright Ragen in Seattle.

"Amazon shoppers tend to think they're getting a pretty good value anyway, and there's the convenience factor," Geiman said, offering a possible explanation for why the company did not have to resort to severe, profit-eroding markdowns. "It may be that shoppers weren't as eager to check out promotions at brick-and-mortar stores and were content to shop on Amazon."

Looking ahead, Amazon expects first-quarter sales of up to $4.9 billion, an increase of as much as 19 percent from a year ago.

Sales from Amazon's U.S. and Canadian Web sites were up 18 percent to $3.63 billion in the fourth quarter. Sales from its U.K., German, Japanese, French and Chinese sites rose 19 percent to $3.07 billion. Without the unfavorable exchange rates, international sales would have increased 31 percent.

Founder and CEO Jeff Bezos said in a statement that demand for Amazon's wireless reading device, the Kindle, was "unusually strong," though the company did not disclose sales figures. Amazon introduced the Kindle in late 2007 and is widely expected to introduce a new version next month. Supplies of the $359 device ran out in November, after Oprah Winfrey promoted it on her show.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com, The Associated Press contributed to this story.