Amazon shares slump

Amazon: Sales could be flat in last three months of the year

Shares in the online retailer Amazon.com plunged 19% in the first two hours of trading on the Nasdaq.

The steep drop came in the first trading after the dot.com revealed that sales were not growing as fast as expected.

Amazon shares have been on a rollercoaster ride over the past year, peaking at $40.9 and hitting a trough of $5.5.

While the company continues to chip away at its losses, the warning that sales growth could be flat in the last three months of the year worried investors.

Targeting break-even

Tuesday's results showed Amazon.com had continued its slow progress towards profitability.

But the improvement appeared to have largely come through cost savings rather than any significant increase in sales.

The big news for us is that we are still growing very fast and we expect to break even or better in the fourth quarter

Robin Terrell, managing director amazon.co.uk

For the three months to September, Amazon's losses were $58m, compared with $89m in the same period last year.

But sales for the period were just $1m higher at $639m, broadly in line with Wall Street expectations.

And the firm warned that fourth-quarter net sales would be flat or rise at most by 10%, compared to last year.

Promised bargains

In a statement, Jeff Bezos, founder and CEO of Amazon.com, said: "We continue to expect pro forma operating profitability for the fourth quarter, and while there are no guarantees, we are well positioned to achieve this important milestone.

"We've lowered our operating costs 20% and can now afford to drive growth by lowering prices for customers.

"If you're buying books over $20 from anywhere but Amazon.com, you're probably wasting money."

But some analysts were clearly cautious of the stock, with both SG Cowen and Merrill Lynch choosing to cut ratings.

At 1100 in New York (1500 GMT), Amazon shares stood at $7.74, down from the previous close of $9.55.