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Amazon meets expectations, but offers dim holiday forecast

Shares of the e-commerce giant were down 15 percent in after-hours trading.

This post was updated at 2:20 p.m. PDT to include Amazon's announcement that it won't launch an upgraded Kindle until next year.

Amazon's third-quarter revenue was in line with analyst expectations, but e-commerce doesn't appear to be immune to the economic slump pounding offline and online retailers alike.

For the quarter ended September 30, Amazon reported $4.26 billion in revenues, up 31 percent compared with $3.26 billion in third quarter of 2007. The numbers came in on the low side of Amazon's forecasts from last summer. The company said revenue would be between $4.2 billion and $4.4 billion. Analysts, on average, expected revenue to be $4.28 billion.

Amazon rival eBay last week lowered fourth-quarter revenue expectations, and Wall Street was very interested to learn how Amazon thought it would fare during the holiday season. Forrester Research expects online retail growth to slow for the first time this holiday season as a result of the weak economy.

Forrester estimates that shoppers will spend $44 billion online during the holiday season. That figure represents a 12 percent increase from last year, but it's the slowest rate of growth for online retail to date.

During a conference call after the earnings release, Amazon executives said sales of the Kindle, the company's digital book reader, continue to surpass expectations and the company doesn't have plans to introduce an upgraded model until next year at the earliest.

Amazon's stock closed trading Wednesday at $49.99. Shares, however, dropped as much as 16 percent in after-hours trading, changing hands recently at $43.75, down $6.24 or nearly 13 percent from their closing price.

Wall Street has hammered Amazon's share price; the stock is down more than 50 percent from its 52-week high of $101.09.

Net income for the quarter was up 48 percent to $118 million, or $0.27 per diluted share, compared with net income of $80 million, or $0.19 per diluted share for the same period last year.

Amazon said the fourth quarter, the vital holiday period, will produce revenue of between $6 billion to $7 billion. That represents growth of 6 percent to 23 percent. During the conference call, company executives didn't provide many more details on what they think the holiday quarter will bring.

Amazon saw a 48-percent increase in net income.