Bezos hopes to cut the losses

"We continue to make progress toward reaching pro forma operating profitability in the fourth quarter of 2001," said Warren Jenson, Amazon's chief financial officer, in a statement.

The results are the sixth quarter where the company has reduced losses and the first time it has shown a profit in it US operations.

But the company's earnings from its core books, music and video unit, which accounts about 60% of its income, have only grown 1% in the past year.

Amazon added that it expects sales to slow in the coming months.

Future growth

It is on the electronics, tools and kitchen division which the company has pinned its hopes because it has the greatest potential to earn the company cash. It recently started selling electronics in Britain.

Revenues were also helped by Amazon's growing international segment where revenues grew by 75% and profits by 80%.

Amazon operates in Britain, Germany, France and Japan, and is building up its product line in these regions.

But to reach the profit goal, Amazon is scaling back operations, closing distributions centers, shelving plans for a new corporate headquarters and laying off 15% of its staff.

AOL stake

AOL Time Warner took a $100m stake in Amazon on Monday as part of an expanded alliance with the e-tailer.

Under the terms of the multi-year alliance, the two companies will team up to develop and offer online shopping service's for the 30m subscribers to America Online's internet services, an AOL statement said.

Amazon added it will promote AOL as its exclusive internet service provider, while also promoting an online boutique offering a variety of AOL Time Warner products and services, including service subscriptions.