Amazon Posts Sales Surprise

Amazon reported stronger than expected first-quarter sales late Tuesday and also raised its second-quarter and 2006 guidance.

Amazon’s first-quarter earnings of 12 cents a share were in line with Wall Street estimates. Operating income declined 2% to $106 million. Net sales rose 20% to $2.28 billion, ahead of $2.22 billion forecasts. Expenses continued to rise faster than sales, with operating expenses up 26% in the quarter, but the company said margins will improve in the second half of the year.

The online retailing giant said it expects second quarter sales of $2.03-$2.18 billion, compared to $2.09 billion estimates. Full-year guidance of $9.9-$10.5 billion compared favorably to $10.07 billion forecasts.

Amazon said it is appealing the loss of Toysrus.com’s business, which could cut operating profit by $25-$50 million.

Worldwide electronics and other general merchandise accounted for 28% of sales, up from 25% in the year-ago period. Enterprise solutions revenue grew 31%.

Amazon shares edged higher in after-hours trading.

Also after the close, Corning beat estimates and reaffirmed guidance.

Stocks fell during the day on inflation concerns after consumer confidence and home sales data came in stronger than expected.

The Nasdaq lost 3 to 2330, the S&P 500 fell 6 to 1301, and the Dow lost 53 to 11,283. Volume rose to 2.37 billion shares on the NYSE, and 2.34 billion on the Nasdaq. Decliners led 20-12 on the NYSE, and 15-14 on the Nasdaq. Downside volume was 61% on the NYSE, and 38% on the Nasdaq. New highs-new lows were 153-121 on the NYSE, and 188-57 on the Nasdaq.

Sun Microsystems gave up most of a big overnight gain on news that CEO Scott McNealy will step down.

AT&T , Agere , CDW , Level 3 , RightNow and Zoran rose on their results.

Lucent , CA , CNET and Stamps.com fell on their results. Lucent also discontinued guidance.

JDA Software lost 4% on its results and the acquisition of Manugistics .