Oct. 24 (Bloomberg) -- Amazon.com Inc., the world's largest Internet retailer, fell the most in more than a year in New York trading after it forecast profit that may miss some analysts' estimates.

Amazon.com said yesterday that fourth-quarter operating income will be between $221 million and $291 million. Scott Tilghman, an analyst at Soleil Securities Corp. in Baltimore, estimated profit of $278.5 million.

The retailer's shares topped $100 yesterday for the first time in almost eight years before Amazon.com said third-quarter profit quadrupled as customers purchased electronics, jewelry and the final Harry Potter book.

``When the results came in and turned out to be very good, and the guidance was positive, it still wasn't as positive as some investors' excessive expectations would suggest,'' Jeffrey Lindsay, an analyst at Sanford C. Bernstein & Co. in New York, said yesterday.

Third-quarter net income climbed to $80 million, or 19 cents a share, from $19 million, or 5 cents, a year earlier. Revenue increased 41 percent to $3.26 billion, Amazon.com said in a statement. The company also increased more-profitable sales by third parties overseas and reduced growth in technology spending.

Sixteen analysts surveyed by Bloomberg predicted average profit of 18 cents a share. Seventeen projected sales of $3.14 billion.

Sales Forecast

Amazon.com declined $12.09, or 12 percent, to $88.73 as of 4 p.m. New York time in Nasdaq Stock Market composite trading, a day after closing at $100.82, its highest since December 1999. The shares have more than doubled this year.

Amazon.com raised its full-year sales forecast to as much as $14.6 billion, a 36 percent gain from 2006, from an earlier estimate of at most $14.3 billion. Operating income may climb to as much as $675 million, from a previous forecast of at most $640 million, the retailer said.

Technology and content spending slowed to 6.4 percent of sales, less than the 7.3 percent ratio estimated by Bernstein's Lindsay, who rates Amazon.com shares ``outperform'' and doesn't own any of the stock.

Chief Financial Officer Thomas Szkutak said in March that the company would curb spending on technology after Amazon.com's profit margin fell to the lowest level since 1999.

Harry Potter

The retailer sold 2.5 million copies of ``Harry Potter and the Deathly Hallows'' worldwide, its largest new product release.

Third-party sales climbed to 32 percent of total units sold. The online retailer has expanded transactions through which customers and merchants sell goods through Amazon.com in Germany and Japan.

``They're beginning to do what EBay revolutionized several years ago and create this virtual inventory model, no inventory model, that is very profitable,'' said Darren Chervitz, research director at the Jacob Internet Fund, managed by Jacob Asset Management LLC in New York.

Amazon.com, which doesn't give details on specific categories, said sales of electronics, jewelry, furniture and other general merchandise climbed 54 percent to $1.08 billion. Books, DVDs and other media sales increased 36 percent to $2.09 billion, helped by sales of the final Harry Potter book.

Product Diversity

Amazon.com 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 comprised 64 percent of sales, down from 67 percent a year earlier.

Electronics, toys, baby products, apparel, shoes, sporting goods and jewelry were among the best-performing product groups, Szkutak said during a conference call. Amazon.com sells products in more than three dozen categories.

``They have a timeless and cutting-edge variety that protects them against some of the ups and downs of retail,'' said Tilghman. ``The opportunity to roll out those categories internationally is significant.'' He rates the shares ``buy'' and doesn't own any.

U.S. and Canadian sales, which comprised 55 percent of total third-quarter revenue, added 42 percent to $1.79 billion. Overseas sales, which includes the U.K., Germany, Japan, France and China, jumped 40 percent to $1.47 billion, with 7 percentage points of the gain helped by the weaker dollar.

Amazon.com began a digital-music download service at the end of last month to compete with Apple Inc.'s iTunes, selling restriction-free tracks from more than 20,000 record labels. It also offers the Unbox video-download service.

To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net.

Last Updated: October 24, 2007 16:26 EDT