saw revenues and profits rise in its first quarter, but failed to meet analyst earnings expectations.

The company revealed its fourth quarter 2004 financial results last night. Its net revenue was $2.54 billion, an increase of 31 per cent compared with 2003's fourth quarter. The online retailer exceeded the consensus forecast of $2.44 billion from analysts polled by Thomson First Call. Excluding an $85 million benefit from foreign exchange rates, net revenue grew 26 per cent during the quarter.

Amazon had net income of $347 million, or $0.82 per share, up from $73 million, or $0.17 per share. Pro forma net income, which excludes, among other things, stock-based compensation and the benefit from a $244 million deferred tax asset, was $149 million, or $0.35 per share, below analysts' consensus expectation of $0.40 per share.

Amazon Prime - pay to post

Amazon also introduced a new membership program called Amazon Prime, which, for a flat fee of $79 per year, gives members free, unlimited, two-day shipping without a minimum purchase requirement. Amazon Prime also offers members one-day overnight shipping for $3.99 per item. Members can extend their benefits to up to four family members living in their house.

"Two-day shipping becomes an everyday experience rather than an occasional indulgence," said Jeff Bezos, Amazon's CEO, in a statement.

Bezos acknowledged Amazon Prime will be expensive for the company in the short term, but he said in the statement that it will provide a "significant benefit" and convenience for customers.

For the full year, Amazon had $6.92 billion in net revenue, compared with $5.26 billion in 2003, for growth of 31 per cent. Net income for the year came in at $588 million, up from $35 million in 2003.

Looking ahead, Amazon expects net revenue to be in the range of $1.80 billion to $1.95 billion in 2005's first quarter, which would mean growth of between 18 per cent and 27 per cent compared with 2004's first quarter. For the full year, Amazon expects net revenue in the range of $8.05 billion and $8.65 billion.