Amazon Profit, Sales Both Rise and Top Expectations

Amazon.comturned in quarterly results that both rose and outpaced what Wall Street was expecting, but its costs rose even faster, and its shares fell about 4 percent.

The online retailer said it earned $231 million, or 51 cents a share in the third quarter, versus $199 million, or 45 cents a share in the same period last year.

Sales rose to $$7.56 billion, up from $5.449 billion a year ago.

At the same time, operating expenses rose more than 40 percent to $7.29 billion.

Equity analysts who follow Amazon had expected the company to earn 48 cents a share on revenue of $7.36 billion, according to Thomson Reuters.

Amazon shares dropped in extended trading Thursday. Get after-hour quotes for

The stock finished the regular Nasdaq session up about 4 percent after hitting a new 52-week high of $166.13 on volume that almost reached 11 million shares.

"Revenue increased 39 percent but operating income only grew 7 percent. It's the opposite of what people want to see. People want to see more leverage coming out of the company," said Colin Gillis, analyst at BGC Partners in New York.

Revenue from Amazon's largest sales category, electronics and other general merchandise, shot up 68 percent to $3.97 billion. Revenue from books, CDs, DVDs and other media grew 14 percent to $3.35 billion.

A lower-priced Kindle e-reader, plus new categories of products, more outside sellers and fall sales momentum have helped Amazon post robust sales that have outperformed rivals and e-commerce trends in general.

Looking ahead, Amazon said it expects sales in its holiday fourth quarter of between $12.0 billion to $13.3 billion—representing growth of 26 percent to 40 percent—on operating profit of $360 million to $560 million—representing a decline of 24 percent to growth of 18 percent.

"In terms of holiday, the guidance for Q4 is fine on the top line," Gillis said. "This is not a revenue issue right now. This is a possibility issue with Amazon. A leverage, margin issue. On the last call, they talked about how the company needs to be investing to prepare for future growth."

Amazon's report comes quickly on the heels of results from rival eBay, which topped both earnings and revenue forecasts late Wednesday.

Earlier Thursday, venture capital firm Kleiner Perkins announced that it would set up a $250 million fund, along with Amazon and others, to invest in social media startups.

- Reuters and AP contributed to this report.