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Amazon's bargain prices lure customers

AMAZON.COM on Thursday beat Wall Street expectations for quarterly earnings and revenue as lower prices lured more shoppers online and sales of its Kindle electronic reader gained momentum.

Shares in the global online retailer, which sells everything from car parts to comic books, rose 2.3 percent in after-hours trading, despite a weak second-quarter profit view.

The company increased revenue by an unexpectedly strong 18 percent as cash-strapped consumers went shopping online and Amazon's own discount shipping program spurred purchases.

"Sentiment is so positive on Amazon, for the stock to decline it would have had to miss numbers entirely," said BWS Financial's Hamed Khorsand. "You have this aura of positive sentiment around the stock. That will keep the stock afloat."

Promotions and cost-consciousness - as customers eschewed a trip to the mall in favor of browsing for free online - helped it post a 21 percent sales gain in North America.

"It tells you how well they're executing and winning business with customers," said Steve Weinstein at Pacific Crest Securities.

Chief Executive Jeff Bezos said sales of the company's Kindle had "exceeded our most optimistic expectations."

The Kindle, sales of which are not disclosed, has garnered out-sized attention but analysts cannot speculate to what extent the US$359 device contributes to profit, if at all.

"The important takeaway from Kindle is not only it is a revenue generator, but it's also (a generator of) incremental revenues from e-books being sold," Khorsand said.



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