SAN FRANCISCO (Reuters) -
Amazon.com Inc (AMZN.O) said on
Wednesday quarterly profit doubled and sales grew 41 percent,
indicating to Wall Street that many cost-conscious shoppers are
heading online to save money in a tough economy.

Amazon shares jumped 8 percent, after zig-zagging in early
extended trade because an unanticipated gain on an asset sale
initially obscured the underlying earnings performance.

"The numbers are good, very solid," Stifel Nicolaus analyst
Scott Devitt said. "It shows the company is performing very
well relative to the industry."

The company said it benefited from shoppers going online to
save on gasoline. Chief Executive Jeff Bezos also said Amazon's
Kindle digital book reader was gaining readers, while the
number of independent sellers offering goods on Amazon's site
continued to grow.

Recent disappointing results from rival eBay Inc (EBAY.O)
and tech giants Apple Inc (AAPL.O) and Google Inc (GOOG.O) have
worried investors, who seemed unfazed by Amazon nudging lower
the midpoint of its 2008 operating income target range.

The company posted second-quarter net profit of $158
million, or 37 cents per share, compared with $78 million, or
19 cents per share, a year earlier. Revenue in the quarter,
which is seasonally the slowest, rose to $4.06 billion.

That beat analysts' average revenue forecast of $3.95
billion, according to Reuters Estimates. The profit comfortably
topped the average Wall Street target of 26 cents per share,
though excluding the European sale the beat was just 2 cents.

WINDFALL FROM SALE

The $53 million non-cash gain was from the sale of Amazon's
European DVD rental business and was an unexpected boost to the
operating profit margin, as well as earnings.

Seattle-based Amazon, despite lowering prices on many goods
to spur purchases during the U.S. economic downturn, reported a
rise in operating profit margin to 5.3 percent of total sales
from 4.0 percent a year ago.

Amazon also benefited from the weak dollar's impact on
international sales, which grew 47 percent. Excluding the weak
dollar boost, international sales rose 34 percent -- similar to
U.S. growth of 35 percent.

Amazon said it sees third-quarter net sales of $4.2 billion
to $4.425 billion, or growth of 29 percent to 36 percent.

Operating income is expected to range between $115 million
and $160 million, representing a decline of 6 percent to growth
of 31 percent, and including $80 million in stock-based
compensation and amortization of intangible assets.

Amazon said it now expects 2008 net sales of $19.35 billion
to $20.10 billion versus $19.1 billion to $20.0 billion before.
Wall Street has been expecting $19.6 billion, on average.

Operating income is now expected to be between $745 million
and $920 million versus $740 million to $940 million before,
lowering the midpoint to $832.5 million from $840.0 million.

Amazon, which has been beefing up its digital offerings,
including a new streaming video service, does not reveal Kindle
sales. But Bezos said 10 percent or more of the 140,000 titles
available for Kindles, or a low-double-digit percentage, were
being sold for electronic reading rather than in book form.

Valued at 45 times projected 2008 earnings, Amazon shares
trade well above many Internet stocks as well as traditional
retailers with big online divisions like Wal-Mart Stores Inc
(WMT.N), Target Corp (TGT.N) and Best Buy Co Inc (BBY.N), at
17, 13 and 12 times projected earnings, respectively.

"Good luck to you if you want to buy it here, because it's
pretty rich," Global Crown Capital analyst Martin Pyykkonen
said, noting Amazon gave no indication that margins would
expand enough to justify such a multiple.

Amazon shares gained nearly 4 percent to $70.54 in regular
Wednesday trade before rising in extended trade to $76.80.

(Additional reporting by Jim Christie and Anupreeta Das;
Editing by Braden Reddall)

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