Amazon saw revenue jump by 27 per cent, year on year, thanks partially to the magic of Harry Potter.

Fans of the young wizard bought 1.6 million copies of the latest book during the period. The company predicted more modest growth during the all-important holiday shopping season, saying Tuesday that sales for the current quarter are expected to grow by between 13 per cent and 24 per cent.

Amazon posted revenue of $1.9 billion for its third quarter, which ended September 30, and predicted that fourth quarter revenue would fall between $2.9 billion and $3.2 billion. Those numbers are up from revenue of $1.5 billion and $2.5 billion, respectively in the third and fourth quarters of 2004.

Amazon senior vice president and chief financial officer Tom Szkutak gave a subdued prediction for the quarter ahead: "We're cautiously optimistic. It is however a seasonal quarter, and that's hard to predict," he said.

The company's third quarter earnings where marred by an unexpected $40 million patent lawsuit settlement payment. Net income was $30 million for the quarter, or $0.07 per share, Amazon said. Not counting the settlement, which resulted in a $20 million after-tax cost, they would have come in at $50 million or $0.12 per share.

Amazon's earnings were better last year. The company reported net income of $54 million, or $0.13 per share for the third quarter of 2004.

Sales in the US and Canada were $1.04 billion for the quarter, up 28 per cent, year over year. International sales, representing the company's UK, German, French, Japanese and Chinese sites, totaled $817 million, a 26 per cent jump.

Investors were not impressed with the company's results. Shares of Amazon's stock dropped nearly 8 per cent Tuesday evening, trading at $42.69 on the after-hours market. The stock closed Tuesday at $46.17.

In related news, Amazon has also reduced the qualifying order price for free delivers, from £19 per order to £15. On launch, the free delivery service required a minimum order payment of £25.