Amazon's high volume, low price strategy is paying off

The company said free delivery offers and a new sporting goods store had helped boost revenue by 33%.

It also gave an upbeat assessment of trading in the current quarter, predicting sales growth of between 24% and 34%.

The results - only the third time in its history Amazon has made a quarterly net profit - were slightly better than most Wall Street estimates.

Share dip

But the company's shares - which earlier on Tuesday hit their highest level since May 2000 in anticipation of a strong results - dipped slightly in after-hours trade at $58.15.

I think internationally, our expectation is that this will be a record Christmas season for us Robin Terrell, managing director, amazon.co.uk

Jeetil Patel, analyst at Deutsche Bank Securities, said: "They came in modestly above forecasts, but I think expectations were that they could have done much better."

Some analysts have warned Amazon's stock is dangerously over-valued.

Sales growth

Amazon reported a net profit of $16m (�9.5m; 13.7 euros), or 4 cents per share, for the three months to 30 September.

That compares with a loss of $35m, or 9 cents per share, in the same period a year earlier.

Sales rose to $1.1bn from $851m, an increase of 33%.

If sales growth for the next quarter meet the company's expectations, they will reach $1.78bn, compared to $1.428bn the same period last year.

Amazon said it expects 2004 sales of $5.75bn to $6.25bn, a rise of 10% to 20%.

Discount policy

Amazon's international division, which includes the UK, France, Germany and Japan, saw sales increase by 61% to $425m over the past quarter.

The company does not publish separate profit figures for its international operations.

But amazon.co.uk's managing director Robin Terrell said that, overall, the results were a vote of confidence in Amazon's strategy of heavily discounting stock and offering free delivery on many items.

He was also upbeat about the company's prospects going forward.

"I think internationally, our expectation is that this will be a record Christmas season for us," he told BBC News Online.