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Amazon shows investors big spending doesn't have to mean small profits - widely beats forecast

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NEW YORK — Shares of Amazon.com jumped over 8 percent in aftermarket trading after the e-commerce giant beat quarterly profit expectations by a mile.

Amazon's strategy always has been to spend a big chunk of the money it makes to grow and expand into new areas like cloud computing, streaming video and hardware — and that has affected profitability to investors' sometime chagrin. But Thursday's results seem to show the company has the reins in hand when it comes to spending big and being profitable.

Investors sent shares up $26.92, or 8.6 percent, to $338.60 in aftermarket trading.

Amazon Prime membership surged 53 percent during 2014, even though the Seattle-based company raised prices.

Amazon earned 45 cents per share for the three months ended in December, easily topping Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 24 cents per share. The online retailer posted revenue of $29.33 billion in the period, missing Street forecasts. Analysts expected $29.84 billion, according to Zacks. Amazon said the strong dollar pared nearly $900 million from revenue during the quarter.

For the current period ending in March, Amazon forecast revenue in the range of $20.9 billion to $22.9 billion. Analysts surveyed by Zacks expected revenue of $23.23 billion.

Amazon shares have increased slightly since the beginning of the year, while the Standard & Poor's 500 index has decreased almost 2 percent. In the final minutes of trading on Thursday, shares hit $311.87, a decrease of 19 percent in the last 12 months.

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Elements of this story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on AMZN at http://www.zacks.com/ap/AMZN

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Keywords: Amazon, Earnings Report, Priority Earnings

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