Amazon beats profit forecasts

Amazon.com Inc.'s shares jumped more than 8% after the online retail giant posted a larger-than-expected profit in the fourth quarter.

The company, which saw solid sales gains in the key holiday shopping period, reported net income of $214 million, or 45 cents a share.

Even though that's less than the $239 million, or 51 cents a share, earned a year earlier, it was well above analyst expectations of 18 cents a share. It also ended a string of two consecutive losing quarters.

Sales grew 15% to $29.33 billion, missing analyst expectations of $29.71 billion.

One key to those solid numbers: a 53% gain in Amazon Prime memberships, the $99-a-year service offering shipping on millions of products at no additional cost. Amazon raised the annual subscription price by $20 last year but suffered no ill effects.

"When we raised the price of Prime membership last year, we were confident that customers would continue to find it the best bargain in the history of shopping. The data is in and customers agree," Amazon Chief Executive Jeff Bezos said in a statement.

Amazon Chief Financial Officer Tom Szkutak noted that Prime subscribers shop more often and buy more products than non-Prime customers.

"When a customer becomes a Prime member, they do step up their purchases considerably," Szkutak said.

For years, shareholders have been willing to watch Amazon rack up losses, or at least post skimpy profits, while it invested in new businesses that it might one day dominate. But a year ago, that patience waned. In the fourth quarter of 2013, Amazon missed earnings expectations and, within months, its shares lost a quarter of their value.

Amazon shares ended the trading day up $7.87, or 2.6%, to $311.78. They climbed $25.57 more in after-hours trading to $337.35 after the release of earnings.

Although Amazon made money in the fourth quarter, it's projecting a loss or slight profit in the current quarter. Amazon expects results in the range of a $450-million operating loss to a $50-million operating profit.

Greene writes for the Seattle Times/McClatchy.

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