July 24 (Bloomberg) -- Amazon.com Inc., the world's biggest online retailer, said profit more than tripled after it reduced technology spending and boosted sales of electronics. The company increased its annual sales forecast, causing shares to surge 21 percent in extended trading.

Second-quarter net income rose to $78 million, or 19 cents a share, from $22 million, or 5 cents, a year earlier, Seattle- based Amazon said today in a statement. The results beat analysts' estimates by 3 cents.

Revenue rose 35 percent to $2.89 billion on increased sales of electronics, jewelry and other merchandise. North American sales surged 38 percent. The retailer cut back on the rate of spending on its Web sites and on newer products such as the Unbox video-download service.

``Electronics and general merchandise are becoming a larger part of the business,'' said Colin Sebastian, a San Francisco-based analyst with Lazard Capital Markets LLC. ``On the investment side, they've moderated the increases.''

Amazon said sales for 2007 will be as much as $14.3 billion, higher than its April forecast of as much as $14 billion. Analysts surveyed by Bloomberg had estimated $13.8 billion on average.

Shares of Amazon jumped $14.87 to $84.12 at 7 p.m. in trading after U.S. exchanges closed. Earlier they fell $2.49, or 3.5 percent, to $69.25 at 4 p.m. in Nasdaq Stock Market composite trading.

Eighteen analysts surveyed by Bloomberg estimated average net income of 16 cents a share on sales of $2.81 billion.

Low Prices

``Our strong revenue growth this quarter was fueled by low prices and the added convenience of Amazon Prime,'' the company's membership program, Chief Executive Officer Jeff Bezos said in a statement.

Technology and content spending slowed to 7 percent from 7.8 percent of sales, less than the 7.8 percent ratio estimated by Jeffrey Lindsay, a New York-based analyst with Sanford C. Bernstein & Co. who rates shares ``market perform.''

That helped the company's operating margin climb to 4 percent of sales from 2.2 percent, Chief Financial Officer Thomas Szkutak said.

Szkutak said in March that the company would curb spending on technology this year after Amazon's profit margin in 2006 fell to the lowest level since 1999.

Amazon, which doesn't give details on specific categories, said sales of electronics, jewelry and general merchandise climbed 55 percent to $970 million. Books, DVDs and other media sales increased 27 percent.

Harry Potter

The retailer received a record 2.2 million orders for ``Harry Potter and the Deathly Hallows.'' That increased second-quarter sales less than 1 percent, Szkutak said.

Third-quarter sales will climb as much as 38 percent to $3.18 billion, Amazon said. Operating income may more than double to as much as $110 million, the retailer said.

Amazon has sought to diversify its product offerings as Barnes & Noble Inc. and other bookstores have cut prices and promoted customer loyalty programs. Sales of books, DVDs and other media made up 64 percent of the company total, down from 68 percent a year earlier.

``Clearly, with the digitization of media, it's been a wise move to move to other areas,'' said Scott Tilghman, a New York-based analyst with Soleil Securities Corp. who rates shares ``buy.''

Amazon has marketed third-party sales, through which customers and merchants sell goods through the retailer, and enhanced the Web services program to lure developers who want to use its technology.

The retailer sells products in about three dozen different categories, including jewelry and gourmet food.

More than 49 million people visited Amazon Web sites in June, marking a 8.2 percent increase from a year earlier and making it the eighth most popular in the U.S., according to Nielsen/NetRatings.

To contact the reporter on this story: Danny King in Los Angeles at dking19@bloomberg.net

Last Updated: July 24, 2007 19:03 EDT