SEATTLE – Internet retailer Amazon.com Inc. said Tuesday that its third-quarter profit fell 44 percent, in large part because of the settlement of a patent-infringement lawsuit.
In a report released after the markets had closed, the Seattle-based company said its net earnings were $30 million, or 7 cents a share, for the three months ended Sept. 30, down from $54 million, or 13 cents a share, from the same period in 2004.
The slump in profits came despite a hefty rise in revenue. The company said net sales increased to $1.86 billion in the third quarter, up 27 percent from $1.46 billion last year.
Excluding an unanticipated one-time $40 million legal charge, Amazon said its net income would have been $50 million, or 12 cents a share.
The consensus forecast of analysts polled by Thomson Financial was 10 cents a share on revenue of $1.84 billion.
In August, Amazon announced it would pay $40 million to Soverain Software LLC to settle a patent-infringement lawsuit. Chicago-based Soverain alleged that Amazon’s Web site infringed on several Soverain patents on network sales and Internet server access control and monitoring systems.
Amazon shares slipped 76 cents, or about 1.6 percent, to close at $46.17 Tuesday on Nasdaq. The stock sank another $3.44, or 7.5 percent, in after-hours trading. It has been trading at between $30.60 and $46.97 for the past 52 weeks.
Amazon sales in the United States and Canada jumped to $1.04 billion, up 28 percent from $816 million reported in the same period last year. International sales rose to $817 million, up 26 percent from 2004, when sales were $647 million.
Electronics and general merchandise sales were brisk, growing 43 percent worldwide to $491 million, up from $344 million last year.
Books, music and other products in the media category still make up the bulk of the company’s revenue. Media sales rose 20 percent to $1.31 billion, up from $1.09 billion last year.
Amazon said it sold more than 1.6 million copies of the latest Harry Potter edition, making it the company’s biggest new product release.
For the coming fourth quarter, the company said it is projecting sales to range from $2.86 billion to $3.16 billion, which would be a 13 percent to 24 percent increase from fourth quarter 2004.
For the full fiscal year, Amazon predicted net sales of $8.37 billion to $8.67 billion, 21 percent to 25 percent higher than last year’s profits.
Amazon.com started out as a virtual bookstore 10 years ago and is now one of the world’s largest Internet retailers.
Associated Press
Amazon founder and CEO Jeff Bezos holds a copy of “Fluid Concepts and Creative Analogies” by Douglas Hofstadter, which was the first book sold online by the company.
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