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Amazon is investing in expansion

Published 28/07/2011's second-quarter profit fell as the leading online retailer continued to spend on expanding its business.

At the same time, higher merchandise sales lifted revenue 51%.

Both results easily beat analyst expectations, as did Amazon's third-quarter sales outlook.

Amazon shares rose 6% in after-hours trading.

For the quarter ending June 30, revenue rose to $9.91bn (£6.04bn) from $6.57bn (£4bn) last year.

The company's electronics and general merchandise revenue rose 69% to $5.89bn (£3.6bn), while sales of books, CDs, DVDs and other media rose 27% to $3.66bn (£2.23bn).

Amazon chief executive officer Jeff Bezos said in a statement that "low prices, expanding selection and innovation" drove the company's second-quarter growth.

This growth means Amazon must keep investing in operations expansions and upgrades.

In order to support the proliferation of its online retail business, so far this year it has announced it is building 15 new centres to fill orders.

Amazon did not give specific details on sales of its Kindle e-reader, but Mr Bezos said the Kindle 3G is its top-selling Kindle device.

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