Amazon.com Inc on Wednesday posted a quarterly profit that missed Wall Street estimates and unveiled a costly new shipping program that heightened concern about falling margins, sending its shares tumbling nearly 14 percent. Fourth-quarter net earnings more than quadrupled as a weak dollar boosted record holiday sales and the company recorded a $244 million tax benefit. But incentives like free shipping and discounts cut into profits and hurt margins.

Net income during the fourth quarter, which includes the critical holiday season, rose to $346.7 million, or 82 cents per share, from $73.2 million, or 17 cents per share, a year ago. On that basis, Wall Street analysts were expecting the company to post a per-share profit of 40 cents.

Sales rose 31 percent $2.54 billion as lower prices and free shipping attracted customers during the critical holiday season. Excluding the benefits from changes in foreign exchange rates, sales rose 26 percent, the company said.

Copyright Reuters, 2005