Amazon.com posted weaker-than-expected earnings on Thursday, punctuated by a steep decline in its flagship business of selling media products like books, music and DVDs.

Amazon, based in Seattle, said its net profit fell 10 percent, to $142 million, or 32 cents a share, in its second quarter, from $158 million, or 37 cents a share, in the quarter a year earlier. Revenue climbed 14 percent, to $4.65 billion, coming in slightly below Wall Street’s expectations.

Analysts polled by Thomson Reuters on average had expected $4.67 billion in revenue and earnings of 32 cents a share. A charge for a $51 million legal settlement to Toys “R” Us depressed the company’s profit.

Shares of Amazon fell more than $6, or nearly 7 percent, in after-hours trading. It more than doubled in the last eight months as investors applauded the company’s ability to navigate the recession.

“People had looked at their recent performance and assumed that Amazon was, relatively speaking, exempt from the current downturn,” said Jeffrey Lindsay, an analyst at Sanford C. Bernstein. Amazon’s quarter “was by any measure a good performance, but expectations had gotten ahead of themselves,” he said.

For some analysts, the most worrisome indicator was a sharp falloff in Amazon’s media sales in North America. The company’s original business of selling books, CDs and DVDs showed no growth in the second quarter over the prior year, after posting 15.6 percent growth in all of 2008. Worldwide media sales grew only 1 percent, while worldwide sales of electronics and general merchandise grew 35 percent. Read more…

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