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10/22/2008
06:47 PM
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Amazon Reports Strong Growth, Buys Gaming Company

The company reported $4.26 billion in revenue, an increase of 31% but just shy of forecasts that the company would bring in $4.48 in revenue.

Amazon shares fell about 13% in after-hours trading as the company scaled back projections despite strong growth in the third quarter.

By 5 p.m., E.T., Wednesday, when Amazon announced its Q3 results, the company's stock prices dropped 13.04%, or $6.40, to $43.41.

Amazon's net income grew 48%, to $118 million, earning 27 cents per share in Q3. That's up $80 million, or 19 cents per share, compared to the same period in 2007.

The company reported $4.26 billion in revenue, an increase of 31% but just shy of forecasts that the company would bring in $4.48 in revenue.

Amazon scaled back estimates (PDF) for Q4, as retailers brace for weak holiday sales due to national and global economic troubles.

The online retailer predicts $6 billion to $7 billion in sales in the final quarter of 2008. Depending on where sales fall within those estimates, Amazon could see sales growth anywhere from 6% to 23% over the last quarter of 2007.

The company projects year-end net sales between $18.46 billion and $19.46 billion, or an increase of 24-31% compared to 2007. That falls short of previous estimates of up to $20.10 billion for 2008.

Nevertheless, company leaders stressed that Amazon retains value as consumers seek discounts.

"We remain relentlessly focused on delivering value to customers through lower prices, improved selection and our free shipping offers, including Amazon Prime," Jeff Bezos, founder and CEO of Amazon, said. "Customers saved more than $700 million with our global free-shipping programs over the past twelve months, and we expect more customers than ever will take advantage of the benefits of Amazon Prime this holiday season."

The company reported growth in Kindle, Worldwide Media, electronics, and foreign sales, which boosted profits as the U.S. dollar weakened.

Earlier in the week, Amazon said it had acquired Reflexive Entertainment for an undisclosed sum. The site offers free PC game downloads, reviews, tips and tricks, and personal recommendations of casual games

"What this means for all you developers is that it's time to get excited about your future with Reflexive," said CEO Lars Brubaker in a blog to developers. "We can't talk about everything yet, but we'll be in touch shortly with more information. All of the features that you know and love about GameCenterSolution will still be available to you now and in the future, and you can continue to submit games through the Reflexive site."

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