Amazon.com 1Q profit more than doubles; shares soar 12 percent after hours

Web retailer Amazon.com Inc. said Tuesday its first-quarter profit more than doubled, sending shares up more than 12 percent in after-hours trading. The company also raised its revenue outlook for the year.

Earnings for the first three months of the year rose to $111 million, or 26 cents per share, from $51 million, or 12 cents per share, during the same period last year.

Analysts polled by Thomson Financial had forecast a profit of 15 cents per share.

A $12 million reduction in Amazon's tax bite helped nudge results higher, as did a weak dollar against foreign currencies, which added about $5 million to the bottom line, the company's chief financial officer told reporters in a conference call.

Revenue rose 32 percent to $3.02 billion, surpassing Wall Street's expectation of $2.92 billion in sales.

Sales appeared strong across territories and product categories. Amazon's North America sales totaled $1.62 billion, a 30 percent jump. International sales rose 35 percent to $1.39 billion, but this figure doesn't take into account foreign exchange rates. Adjusted for currency fluctuations, the company said international sales grew 27 percent.

Jeff Bezos, Amazon.com's chief executive officer, said in a conference call with analysts that Amazon Prime, the company's free-shipping loyalty program, helped North American sales grow faster than international sales. Analysts have been critical of Prime and the extent to which it cuts into earnings in the past, but Scott Devitt of Stifel Nicolaus said the first-quarter results indicate Prime is "a significant competitive advantage for Amazon."

Analysts have also been quick to point out a jump in spending on technology over the last two years. In 2006, the company spent more than $600 million, according to analysts.

The heavy spending may finally be paying off. The quarterly results are "proof that the investments this company made over the past two years were well worthwhile," Devitt said. "This is only the beginning of the returns against those investments."

Amazon.com attributed overseas sales improvements in part to more third-party merchants that used the site to sell their own goods.

Worldwide, sales of books, CDs and other media products jumped 26 percent year-over-year to $1.99 billion. Sales of electronics and other merchandise rose 48 percent to $947 million.

Tom Szkutak, Amazon's CFO, said sales of so-called soft goods, which include shoes, jewelry and apparel, more than doubled in the quarter. Amazon.com launched a new shoes and accessories site, Endless.com, in January.

"I was pleasantly surprised," said David Garrity, research director at Dinosaur Securities. He said operating expenses and technology spending came in lower than what he was expecting, and worldwide media sales, Amazon.com's core business, picked up.

"They're getting some of their mojo back," Garrity said.

For the second quarter, Amazon.com said it expects revenue between $2.70 billion and $2.85 billion. The company also boosted its revenue outlook for the entire year, expecting from $13.4 billion to $14 billion, up from $13 billion to $13.7 billion.

Amazon also said it repurchased 6 million shares for $248 million during the quarter, and its board authorized a new two-year, $500 million stock buyback program.

Shares were up $5.46, or 12.2 percent, to $50.21 in after-hours trading after losing 2 cents to close at $44.75 on the Nasdaq Stock Market.