Amazon disappoints shareholders

Shares fell in after-hours trading in New York as Amazon highlighted the impact of investment in new warehousing and marketing to support its Kindle electronic reader.

It indicated that operating income could fall as much as 24 per cent to 228.5m or rise 18 per cent to 355.4m in the fourth quarter, which means expenses are likely to rise.

The Seattle-based company reported a seven per cent improvement in operating income in the July to September quarter to 170m.

Larry Witt, an analyst at investment research firm Morningstar, said the level of expenses for both quarters had put a dampener on shares.

He added: "They're still growing fast, but people are probably getting anxious to see operating leverage."

Amazon reported a 39 per cent rise in third quarter revenues to 4.8bn with sales from its largest category of electronics and general merchandise ahead 68 per cent to 2.5bn.