Updated from April 22

Amazon.com ( AMZN) posted its third-straight profitable quarter, topping analysts' estimates.

In the first quarter, the e-commerce superstore earned $111.14 million, or 26 cents a share, compared with a loss of $10.12 million, or 3 cents a share, in the year-ago period. Boosted in part by the declining dollar, the company's revenue jumped 41.2% to $1.53 billion in the quarter.

The slumping dollar helped boost the nominal dollar value of Amazon's overseas sales. Such currency effects added about $87 million to the company's sales in the first quarter and about $7 million to its "consolidated segment operating income," a figure that excludes stock-based compensation and other noncash operating expenses.

Excluding stock-based compensation and other noncash charges and gains, Amazon would have earned $97 million, or 23 cents a share.

On this basis, analysts had projected that the company would earn 20 cents a share on $1.45 billion in revenue, according to Reuters' MultexNet service.

The company also upped its guidance for 2004. Amazon now expects to post operating income of between $380 million to $460 million on sales ranging from $6.45 billion to $6.85 billion. Previously, the company had projected it would post operating income ranging from $355 million to $455 million.

That puts the company's outlook more or less in line with Wall Street's forecasts and investors expressed some disappointment Amazon didn't better consensus. In premarket Instinet trading, the stock was down $2.36, or 4.8%, to $46.50. Amazon shares closed regular trading Thursday up $3.14, or 6.9%, to $48.86.

Assuming that the company's stock count and interest expenses remain relatively constant, the company's guidance implies pro forma earnings ranging from 88 cents to $1.07 a share. Analysts had projected 98 cents a share in earnings on sales of $6.66 billion.

But the company may fall short of analysts' estimates in the second quarter. For the current period, Amazon expects operating income ranging from $65 million to $85 million on sales of between $1.34 billion and $1.44 billion. Assuming that Amazon's stock count and its interest charges remain roughly the same in the second quarter as they did in the first, its guidance implies a pro-forma earnings range of about 15 to 20 cents a share.

Analysts surveyed by MultexNet had expected the company would earn 19 cents a share in the second quarter on a pro forma basis on $1.41 billion in sales.

Despite Amazon's overall good quarter, the company's free shipping program again weighed on its results. Shipping cost the company $43 million more than the $94 million in revenue it brought it. In the first quarter last year, Amazon lost $27 million on $78 million in shipping revenue.

The growing loss helped to dent the company's gross profit margin. In the quarter, Amazon posted a gross margin of 23.58% of sales, down 1.39 percentage points from the first quarter last year.

The company was able to make up for that surge by controlling the growth of its operating expenses. Such costs rose just 8.2% to $250.40 million. As a portion of sales, they fell by nearly 5 percentage points to 16.4%.

The biggest factor in that decline was a drop in the cost of the company's stock-based compensation to $7.1 million from $27.7 million in the year-ago quarter.

Amazon's quarter also benefited from the settlement of a "contractual dispute." The company recorded a $6 million gain in the quarter as a result of the settlement. On a conference call with members of the media, company CFO Tom Szkutak declined to give details about the settlement.

Meanwhile, Amazon plans to record a $14 million gain in the second quarter related to the sale of one of its equity investments. Szkutak also declined to provide details on the sale.

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