Amazon misses targets as investment set to hit profit

The company said revenues jumped 36 per cent to $12.95bn (£8.2bn) in the final quarter of 2010 as sales of electronic books for its Kindle electronic device outsold paperbacks in America, but the figure still fell just short of analysts’ expectations.

Profits climbed eight per cent to $416m (£261m) but shares in Amazon fell by about nine per cent on Wall Street after the company said it expected earnings to drop in the current quarter as it invested more on technology.

The company does not break out figures for its UK business but said its Kindle electronic book reader was its best-selling product in the final quarter of 2010, followed by the DVD of Toy Story 3.

Amazon UK took orders for more than 2.3 million items on its busiest day in the run-up to Christmas on Monday, December 6.

Chris North, managing director of Amazon in the UK, said trading had been strong over the Christmas period although the snow in December meant that Amazon had to warn customers that deliveries would take longer.

He said: “We had a strong performance in the UK and we are continuing to support that by investing for the future.

“We are very bullish about our prospects in the UK – the sky is the limit.”

Mr North said Amazon would create 750 jobs when it opened a new fulfilment centre in Dunfermline to deal with orders by the end of 2011.

Amazon started life as an online book seller but has expanded into other categories, most recently grocery, pet supplies and musical instruments. Its latest venture, which started yesterday, has seen it add lingerie to its range.

Amazon this month took full control of film and games subscription business Lovefilm in a deal reported to have valued the company at £200m. It also owns the film website IMDb.

Mr North did not give details about sales of the Kindle reader and the electronic books that run on it in the UK, but said it is growing in popularity.