Amazon.com's shares have slumped after it said losses would not fall, despite a 150% increase in pre-Christmas sales.

The internet retailer blamed the cost of expanding its range of merchandise from books and CDs to include items such as toys.

Amazon said sales in the last three months of 1999 totalled more than $650m, compared with $253m in the same period a year earlier.

The sales growth is such that it sold more in those three months than it did in the whole of 1998.

But its shares plunged more than 10% as chief financial officer Warren Johnson warned that the increase in sales would not mean lower losses.

Delivery concerns

He said the company would incur higher-than-expected inventory-related charges and writedowns, "in large part because we carried deep inventory in start-up businesses such as toys and electronics".

Customer demand in Amazon's newer online stores accounted for more than half of total company revenues.

The company also said that "well over 99% of orders" arrived in time for Christmas.

Shares of e-retailers came under pressure immediately after Christmas in the US due to concerns that much merchandise had been be delivered too late for the holiday.

The fourth quarter figures mean that Amazon's annual sales have now reached $2.6bn, less than five years after first opening for business.

From 10 November to the end of the year, more than 2.5 million new customers shopped with Amazon for the first time and it shipped roughly 20 million items.

"We're especially grateful that so many customers chose Amazon.com for tools, electronics and toys," said Amazon founder and chief executive officer Jeff Bezos.

"Everyone at Amazon.com worked hard and succeeded at delivering a great shopping experience for our customers."