Amazon.com Inc. reported a 48% increase in profit and a 31% revenue jump for the third quarter, but issued a cautious projection ahead of the key holiday season.The revised sales outlook comes just three months after the Seattle-based Internet retailer had raised its revenue forecast for the year, showing how quickly the consumer spending environment has declined. Amazon shares fell more than 13% after hours on the news.
Amazon is an important barometer for consumer spending because it sells everything from books to baby products; its fourth-quarter sales are typically its busiest due to the Christmas shopping season.
Other Internet and consumer technology companies have similarly given conservative or vague financial projections. On Tuesday, Apple Inc. forecast an unusually wide range for its fourth quarter, reflecting its uncertainty. Yahoo Inc. reduced its annual guidance. Last week, eBay Inc. also cut its full-year outlook.
Amazon's chief financial officer, Tom Szkutak, called the overall environment "relatively challenging" and said the company's lowered guidance was conservative. Amazon now expects full-year sales of $18.46 billion to $19.46 billion, down from its previous forecasted range of $19.35 billion to $20.1 billion.
For the current quarter, Amazon said sales would rise between 6% and 23% from a year ago -- or between $6 billion and $7 billion.
The forecast sent Amazon's shares tumbling $6.78 in after-hours trading to $43.21, after closing in 4 p.m. Nasdaq Stock Market trading at $49.99.
Jeff Bezos, Amazon's chief executive, said on a conference call the company is "well positioned" because it worked to be a "low-cost provider" and offers free shipping.
Still, he noted that "all companies have limited visibility right now" and added that Amazon has recently seen deceleration in demand for items priced above $1,000. Amazon will be "especially prudent" in how it makes new investments, he added.
According to a Forrester Research Inc. study released Wednesday, U.S. online retail sales this holiday season will reach $44 billion, up 12% over last year and the slowest growth rate to date.
Still, the study, which was based on two surveys conducted in September and October with 3,195 respondents, found that U.S. consumers still believe the Web can save them money, which could benefit Amazon.
In the study, 48% of respondents said they believed the best deals and prices can be found online, compared with 41% last year. The study also noted that 36% of consumers said higher gas prices would make it more likely that they would shop online, among other findings.
In the third quarter, Amazon's businesses posted growth even in the face of a cautious consumer-spending environment. Sales of books, music and movies grew 19% to $2.49 billion. Its electronics and other general merchandise business rose 52% to $1.64 billion. North American sales, which cover the company's U.S. and Canadian sites, increased 29% to $2.3 billion.
The company said revenue from its Amazon Prime membership, which gives shoppers free shipping in exchange for a yearly fee, jumped 12% to $191 million from $171 a year ago.
Mr. Bezos said in a statement that Amazon's global shipping programs had saved customers more than $700 million over the past 12 months, and he expects more consumers to take advantage of the program during the holiday season.
Amazon's increased selection of goods, attractive pricing and free-shipping programs all helped lure shoppers to the site, said Tim Boyd, an analyst with American Technology Research Inc. Amazon is also increasing its offerings by adding more small- and medium-sized merchants.
Amazon also gave an update on its much-hyped Kindle digital reading device, in which it has invested heavily to spur new growth. The company didn't disclose how many Kindles it has sold, but said Kindle titles now account for more than 10% of unit sales for available books, both print and digital.
The company said book titles for the Kindle have more than doubled since the device's launch last year to over 185,000, all priced around $10 or less. The store also added digital versions of periodicals such as the Financial Times and Los Angeles Times to its selection.
For the three months ended Sept. 30, Amazon's net income was $118 million, or 27 cents a share, compared with $80 million, or 19 cents a share, a year earlier. Net income included a $15 million benefit related to currency. Analysts had expected earnings of 25 cents, according to Thomson Reuters.
Revenue rose to $4.26 billion from $3.26 billion a year earlier, thanks in part to an $80 million boost from favorable foreign exchange rates.
