Amazon.com's profit tumbles more than expected

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By Associated Press

SAN FRANCISCO (AP) — Amazon.com said Tuesday that its net income fell 33 percent in the latest quarter, a steeper drop than Wall Street expected as the online retailer battles stronger competition from Wal-Mart and other rivals.

The numbers reflect the competitive challenges for the world's biggest online retailer and the impact of higher costs of expansion. Amazon's expenses increased by nearly half in the first three months of 2011, including investments in order-fulfillment centers and new technologies.

Thomas Szkutak, the company's chief financial officer, attributed the higher expenses to higher demand.

"We're just seeing tremendous growth, and because of that we're having to invest in a lot of capacity," he said on a conference call with reporters. He added that Amazon's international sales took a hit from the deadly earthquake and tsunami in Japan on March 11, which also cut into Amazon's profit.

While Amazon's earnings fell short of investors' expectations, the Seattle-based company's overall revenue was stronger than expected in the first quarter, as was its revenue forecast for the second quarter.

Net income of $201 million, or 44 cents per share, down from $299 million, or 66 cents per share, a year ago. The earnings were well short of the 61 cents per share that analysts polled by FactSet expected.

Revenue rose 38 percent to $9.86 billion, ahead of the $9.54 billion that analysts were forecasting, and up from $7.13 billion a year ago.

For the second quarter, Amazon says it expects revenue of $8.85 billion to $9.65 billion. Analysts were expecting $8.75 billion.

The stock initially tumbled about 6 percent in extended trading following the release of the earnings report. It quickly recovered, however, and was down just 30 cents, or 0.2 percent, at $182.