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Amazon.com has reported profits and upped its forecasts but still failed to meet expectations for its second quarter - just like eBay and Yahoo!

For the three months to the end of June, the dotbomb survior had net income of $76.5m, or $0.18 a share, compared with a loss of $43.3m, or $0.11 a share, a year earlier. The figures missed Thomson First Call estimates by a penny, and the results would have been about $0.02 lower were it not for beneficial exchange rates from Amazon's non-US businesses.

Q2 Revenue was up by about a quarter over a year ago to $1.39bn, although if the impact of the weak dollar is factored out, revenue would have risen by about 22 per cent. As with its reported earnings, revenue met Amazon's own forecasts but missed Wall Street expectations of $1.44bn.

Like other dotcoms, Amazon is in the unenviable position of having to surpass its own forecasts in order to justify its relatively high stock price. In failing to do so, the firm's shares took a dive in after-hours trading on Thursday night, declining 4.8 per cent to $43.62 after rising in regular Nasdaq trading on the day by $1.06 to $45.82.

Amazon executives in a Thursday conference call said that comparisons to year-ago figures were somewhat unfair, since the company did not have an item like "Harry Potter and the Order of the Phoenix" to sell to customers in the recently ended quarter. Amazon sold 1.4 million copies of that title in the second quarter of last year.

North American revenue from its core items - books, music and videos - slowed, with sales rising only nine per cent to $542m, a sign that business is maturing after several quarters of double-digit growth. Overseas was better, with sales of core goods up 36 per cent to $496m, although in the first quarter the growth figure was 62 per cent.

Analysts were also worried about the fall in Amazon's gross margins, to 24.6 per cent from 24.9 per cent, a decline that was attributed mainly to Amazon's free shipping policy. "Worldwide adoption of our everyday free shipping reached another record high point this quarter," said Jeff Bezos, founder and CEO of Amazon.com. "While free shipping is expensive for the company, it saves our customers tens of millions of dollars each quarter, and we plan to keep it in place indefinitely."

Amazon expects full year revenue of between $6.63bn and $6.93bn, compared with its previous forecast of between $6.45bn and $6.85bn.

© ENN

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