Amazon soars above Street view

But a growing price war with Wal-Mart Stores Inc means that margins could be at risk in coming months.

Amazon.com Inc on Thursday posted quarterly profit that handily beat Wall Street estimates and said holiday sales could come in far above expectations,sending its shares up 15 per cent to their highest level in nearly a decade.

The world8217;s largest online retailer also said its Kindle electronic reader was its top item in both unit sales and dollars across all of its product categories.

8220;It8217;s a strong September quarter,8221; said Colin Gillis of Brigantine Advisors. 8220;They beat on the top and they beat on the bottom 8230; investors are going to be heartened that consumers are still spending.8221;

Citibank8217;s Mark Mahaney said Amazon must be taking market share based on its results.

8220;Amazon should be extremely well prepared for Q4 8212; facing shrinking/destocking offline retail competitors,with THE must-have eReader,and a significantly strengthening presence,8221; wrote Mahaney in a note.

Wall Street expectations for Amazon have been high,and expected it to outpace the market during the crucial holiday season. But a growing price war with Wal-Mart Stores Inc means that margins could be at risk in coming months.

For the key holiday fourth quarter,Amazon said it sees revenue to range between 8.125 billion and 9.125 billion,compared with analysts8217; expectations for 8.13 billion.

The company forecast operating profit between 300 million and 425 million.

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8220;The problem with the guidance is,it is so wide you could drive a truck through it,8221; said Gillis,adding Amazon had a history of providing a wide-ranging forecast.

E-READER CHALLENGE

Amazon8217;s net profit in its third quarter was 199 million,or 45 cents per share,far above the average analyst estimate of 33 cents per share according to Thomson Reuters I/B/E/S. Year-ago profit was 118 million,or 27 cents per share.

Revenue rose 28 per cent to 5.45 billion,the Seattle-based company said,compared to the Wall Street average estimate of 5.03 billion.

8220;The profit you see is really driven by the leverage we got from our strong revenue growth,8221; said Chief Financial Officer Tom Szkutak. 8220;We had very strong demand across categories and geographies.8221;

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Amazon has been rolling out new incentives to spur sales ahead of the holidays. Amazon has cut its prices on top pre-ordered hardback books to 8.99,following the aggressive lead of Walmart.com.

On Thursday,the American Booksellers Association asked the US Department of Justice to investigate that online book price war involving Amazon,Walmart.com and Target Corp,calling it 8220;illegal predatory pricing8221; damaging to the book industry.