Amazon Pays Up to Toys 'R' Us; Stock Down

After years of conentious bickering, the bitter marriage between Amazon(AMZN Quote) and Toys 'R' Us, which went quickly from wedding day to divorce court, is finally settled.

And Amazon is paying up.

The online retailer today announced that it has stuck a deal with Toys 'R' Us, to the tune of $51 million.

The deal sent shares of Amazon down 3% to $81.57 in morning trading, as the payment is expected to put a dent in second-quarter earnings.

The two companies teamed up in 2000, when Toys 'R' Us gave Amazon exclusive rights to offer some toy products on Amazon's site. At the time, Toys 'R' Us was having little success with its Web site Toysrus.com. The deal was supposed to last through 2010.

But the partnership soured after Toys 'R' Us accused Amazon of violating the agreement by allowing others to sell toys on Amazon.com. Amazon argued Toy "R" Us did not keep items in stock.

The two have been battling it out in court since 2004.

Two months ago, a New Jersey appeals court ruled against Amazon and was in the process of deciding damages. The $51 million settlement will, instead, take the place of a court award.

Amazon will make the unanticipated payment in the third quarter, starting July 1. But the company said it will be charged to operating expenses in the second quarter.

J.P. Morgan analyst Imran Khan said it will lower Amazon's profit by about 8 cents per share, and he cut his second-quarter earnings estimate to 20 cents per share from 28 cents.