Amazon net profit doubles, helped by asset sale

SAN FRANCISCO (Reuters) - Amazon.com Inc's (AMZN.O: Quote, Profile, Research, Stock Buzz) quarterly net income doubled from a year ago and beat Wall Street targets, though much of the gain was related to the sale of European DVD rental assets, confusing some investors.

Amazon shares initially jumped more than 8 percent following the results on Wednesday, but quickly traded down to below their closing price of $70.54.

The after-hours share weakness may have been a reaction to a $53 million non-cash gain from selling the European DVD rental assets, said analyst Dan Geiman at McAdams Wright Ragen.

"You back out that one-time item and it was pretty much an in-line quarter," Geiman said.

Amazon posted second-quarter net profit of $158 million, or 37 cents per share, compared with $78 million, or 19 cents per share, a year earlier. Revenue in the quarter, which is seasonally the slowest, rose to $4.06 billion.

Analysts, on average, have been expecting revenue of $3.95 billion, according to Reuters Estimates.

Seattle-based Amazon, which has been lowering prices on many goods to spur purchases during the U.S. economic downturn, reported a rise in operating profit margin to 5.3 percent of total sales from 4.0 percent a year ago.

Three analysts polled by Reuters had expected operating profit margins to range between 3.3 percent and 4.3 percent.

For the third quarter, Amazon said it expects net sales between $4.2 billion to $4.425 billion, representing growth of 29 percent to 36 percent.