SAN FRANCISCO - Inc.'s fourth-quarter earnings skyrocketed 71 per cent, as shoppers spent more than ever during a holiday season that improved over the previous year for retailers on and off the web.

Despite the sluggish economy, Amazon did well throughout the year, drawing shoppers with its Kindle e-reader and deals on an immense selection of goods ranging from alarm clocks to stuffed zebras.

Amazon reported Thursday that this behaviour carried through the holiday season, which is typically the busiest time of the year for retailers. And Amazon doesn't expect growth to slow: The company predicted first-quarter revenue that exceeds analyst expectations.

Amazon said it earned US$384 million, or 85 cents per share, in the October-December period. That compares with $225 million, or 52 cents per share, in the year-ago quarter, which included a holiday season that Amazon had described then as its "best ever," only to be surpassed by the 2009 holidays.

Revenue rose 42 per cent to $9.52 billion. That includes a $200-million contribution from online shoe and apparel store Zappos, which Amazon bought late last year.

The results blasted past estimates of analysts polled by Thomson Reuters, who expected earnings of 72 cents per share on $9.04 billion in revenue.

Amazon forecast revenue of $6.45 billion to $7 billion in the current quarter, an increase of 32 per cent to 43 per cent; analysts had been looking for $6.36 billion, on average.

Revenue from books, CDs, DVDs and other media climbed 29 per cent to $4.68 billion. Electronics and other "general merchandise" revenue rose nearly 60 per cent to $4.61 billion. Revenue increased 37 per cent in North America and nearly 49 per cent elsewhere.

Speaking to analysts during a conference call, chief operating officer Tom Szkutak said there are still plenty of product categories and geographic markets that Amazon could enter.

Dan Geiman, an analyst with McAdams Wright Ragen, said the quarter was "extremely strong" and Amazon's results suggest it took some share of the online retail market from competitors.

"It's just huge growth, given that consumers are still under quite a bit of pressure," he said. "The economy still isn't that great."

As in the past, Amazon did not say how many Kindles it has sold so far, though Amazon CEO Jeff Bezos said in a statement that "millions" of people now own the e-reader.

He also said that it is selling six Kindle books for every 10 physical copies for the titles available in both formats.

Amazon had previously said it reached a Kindle milestone on Christmas Day, when it sold more copies of e-books than physical copies for the first time.

The Seattle-based company is encountering more competition from a growing number of e-reader competitors, though, including Apple Inc., which announced its tablet-style multimedia player, the iPad, on Wednesday.

In hopes of staying ahead of the pack, Amazon cut the Kindle's price yet again during the quarter, slicing $40 to $259.

Barnes&Noble has come out with its $259 Nook, and Sony Corp. has stayed in the game with its Readers, with an entry-level model at $200. Apple's iPad will start at $499 when it comes out in two months.

For the full year, Amazon earned $902 million, or $2.04 per share, on $24.5 billion in revenue.

Amazon also said its board authorized it to buy back up to $2 billion in common stock under a plan that doesn't have a set expiration date.

Shares in Amazon rose $3.08, or 2.5 per cent, in after-hours trading. The stock finished regular trading earlier at $126.03, up $3.28, or 2.7 per cent.

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