updated 2/2/2005 5:04:34 PM ET 2005-02-02T22:04:34

Amazon.com Inc. said Wednesday that earnings for its all-important fourth quarter rose more than fourfold, but the Internet retailing giant was helped by a big one-time tax benefit and missed Wall Street expectations.

The results sent Amazon shares plunging 13 percent, or $5.44, in after-hours trading on the Nasdaq Stock Market, having fallen 60 cents or 1.4 percent to close at $41.88 in regular trading Wednesday. The company reported results after the markets closed.

For the fourth quarter ended Dec. 31, Amazon.com reported earnings of $346.7 million or 82 cents per share, compared with earnings of $73.1 million or 17 cents per share in the same period a year earlier.

The company benefited from a $244 million one-time tax gain. Without that benefit, it would have earned 24 cents per share.

Revenue was $2.54 billion, up 30 percent from $1.95 billion in the same period last year.

Pro-forma profits, which exclude stock-based compensation, operating expenses and other items, were $394 million or 93 cents per share, up from $125 million or 29 cents per share in the fourth quarter of 2003. But without the tax benefit, the company said it would have earned just 35 cents per share.

Based on those numbers, Amazon.com fell short of the expectations of analysts polled by Thomson First Call, who were expecting income of 40 cents per share. Estimates had varied widely, from 32 cents per share to 46 cents per share.

Amazon also announced Wednesday that it would begin offering its customers the option of paying a flat annual fee of $79 for unlimited free two-day shipping on orders. The deal also would let customers pay just $3.99 for overnight shipping.

In a letter to customers posted on the retailer’s Web site, Chief Executive Jeff Bezos said he expected the new program to be expensive for Amazon.com in the short-term but hoped it would build greater long-term loyalty.

For all of 2004, Amazon reported earnings of $588.5 million or $1.39 per share on revenue of $6.92 billion. That compares with 2003 earnings of $35 million or 8 cents per share on revenue of $5.26 billion.

The company’s stock price had fallen to a 52-week low of $33 on Oct. 22, after it reported third quarter results that disappointed investors, but it has since gained ground.

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