Amazon posts lower profit

NEW YORK Amazon.com (AMZN) says its fourth-quarter net income fell 45 percent, as higher revenue failed to keep pace with increased spending on order fulfillment and digital content.

Revenue, along with revenue guidance for the current quarter, missed Wall Street's expectations - but investors still sent the world's top online retailer's stock up more than 10 percent in after-hours trading.

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"It boggles the mind," said BGC Financial analyst Colin Gillis, who attributed the stock price jump to slightly stronger-than-expected operating income. "A lot of people scratch their head at the valuation given to Amazon and the support the stock has."

Amazon.com said Tuesday that it earned $97 million, or 21 cents per share, in the October-December period. That's down from $177 million, or 38 cents per share, in the same period a year earlier.

Revenue for the crucial holiday quarter grew 22 percent to $21.27 billion from $17.43 billion.

Analysts had expected earnings of 28 cents per share on revenue of $22.26 billion, according to a poll by FactSet.

Amazon said operating income increased 56 percent to $405 million from $260 million in the fourth quarter of 2011.

"We're now seeing the transition we've been expecting," said Jeff Bezos, founder and CEO, in a statement. "After five years, eBooks is a multi-billion dollar category for us and growing fast - up approximately 70 percent last year."

For the current quarter, Amazon expects revenue of $15 billion to $16.6 billion. Analysts had expected revenue of $16.86 billion.

The company has been investing a lot of its income into enhancing its distribution network and its Kindle business as part of a long term growth plan.

Seattle-based Amazon's shares rose $27.10, or 10.4 percent, to $287.45 in after-hours trading. The stock had closed down $15.69, or 5.7 percent, at $260.35.