Online retailer Amazon.com said quarterly net profit more than doubled, helped by a lower tax rate and robust sales, and raised its earnings and sales outlook for the year.
Its shares rose nearly 12 per cent after hours yesterday as Amazon's gross profit margin decline was not as steep as expected, allaying some investor worries about declining margins amid increased investment spending.
Analysts Aaron Kessler of Piper Jaffray and Martin Pyykkonen of Global Crown Capital said they were encouraged by the better-than-expected gross margins. Although the margins declined, the drop was not as big as in prior quarters.
Amazon chief financial officer Tom Szkutak told analysts that revenue growth, lower cost of goods sold and higher third-party sales drove that improvement.
"The question is, can that (gross margin) get better over the next several quarters?" asked Pyykkonen.
Net profit rose to $111 million, or 26 cents per share, in the first quarter from $51 million, or 12 cents per share, a year ago. Total sales rose 32 per cent to $3.02 billion from $2.28 billion.
The results beat both Wall Street's and Amazon's own sales and profit expectations. Analysts, on average, had been expecting earnings of 15 cents per share on sales of $2.92 billion, according to Reuters Estimates.
Szkutak said the growth rate for Amazon's technology and content spending in 2007 would be "significantly lower" than in 2006.
Sales of electronics and general merchandise rose 48 per cent in the quarter, while Amazon's media category rose 26 per cent.