Key questions from the third quarter earnings call conducted by Amazon.com, Inc. on October 24, 2006.

Jeetil Patel (Deutsche Bank): You historically have talked about overall profit margins and cash flow margin percentages not important or indicative of the business strategy. how do you think about the operating profile or your game plan in areas like web services, business solutions and social networking services?

Tom Szkutak: When you think of web services and some of the other areas that you mentioned, it is early. It is certainly something we are optimistic about over the long term. In terms of projecting anything near term, I do not think it is appropriate to do so.

Jeetil Patel (Deutsche Bank): Do you look at those businesses that are in this nascent mode today as ways to fuel the growth of the core franchise?

Tom Szkutak: It is some of both. We think that this can be a meaningful business over the long term and can have an impact on the overall economics of the company. The reason we are doing the web services that we are doing is because they are things that we have gotten good at over the last 11 years in terms of building out this web scale application called Amazon.com. As we go about exposing the guts of Amazon, there are other developers out there who require those same sorts of web scale services. These are assets and skills that we needed to build for ourselves anyway. What we are doing here is exposing those and, over time, build that into a meaningful business.

Anthony Noto (Goldman Sachs): What is driving the increase in your cost of revenue?

Tom Szkutak: If you take a look at our marketing expense, it has been in the range of approximately 2.2% to 2.7% over the last several quarters, 2.7% being the most recent quarter. If you look at what we have done over the past year, we have added a lot of new selections. In fact, if you look at the unique selection that we have added under our own roof, that is up over 50% year-over-year. What we are doing is we have spent a lot of time adding selections; we have spent a lot of effort also making sure that our prices are low. We are trying to make sure that our customers realize that we have great selection and good prices in the form of advertising. That is what we are doing. It is still at a modest spend level, being less than 3% of revenue.

Anthony Noto (Goldman Sachs): Is it just a transition from the first year investment in technology to be able to sell the products on your site and offer them, and now you have to invest in the marketing to be able to get awareness of those products so people will buy them?

Tom Szkutak: That is not the way we are thinking about it. You should think that of it in, at least in the recent history, it has been in a lower relative range. We have talked in the past about trying to make sure that we educate customers. That is what we are doing in this case. I would not think of it as a fundamental shift in any way.

Robert Peck (Bear Stearns): When we think about products such as Askville and EC2 and S3 and all that, what is the incremental spend going to those type of more technological or even social products versus the core development of the platform?

Tom Szkutak: We have not broken out technology and content in terms of the specific details. What we have tried to do is give you some help by talking about some of the larger buckets. If you look at the year-over-year increase, you are seeing investments in web services, investments in digital, investments in the seller platform, investments in other customer experience. That is from a technology standpoint. In addition to that, certainly new categories. The content piece of technology and content and some of the announcements that we have made recently in terms of Automotive and other category launches are certainly part of that spend as well.

Robert Peck (Bear Stearns): Could you talk about any integration issues or hurdles you have had building the toy store up?

Tom Szkutak: We have been spending a lot of time trying to improve selection in toys, in a short period of time both with retail selection as well as third-party selection. We have been spending time over the past several months doing that, making sure that we monitor prices carefully. Those two things we have been doing over the last several months, getting ready for the most seasonal aspect of toys, which is fourth quarter. We have over 125,000 unique items in toys currently that we are offering. Those are things that we think over the long term toys are something that is going to be good for customers and for shareholders. We are pleased with what we are doing there.

Robert Peck (Bear Stearns): Could you give us more details around Unbox?

Tom Szkutak: We are pleased that we continue to add selection in Unbox but again, video is very early. We are going to continue to innovative on that over time and make the experience even better for customers.

Paul Keung (CIBC World Markets): Looking at the category after Toys 'R' Us where you are today versus where you would have been six months or a year ago, do you think the category will be better, the same or worse in terms of revenue growth and profitability this quarter in light of what you are going to do?

Tom Szkutak: In terms of Toys 'R' Us, in terms of the revenue and the profitability, it is incorporated into our guidance in the fourth quarter. We are not breaking out the specific number within guidance.

Paul Keung (CIBC World Markets): Could you give an update in terms of how the Marks & Spencer launch went this month?

Tom Szkutak: We are pleased with the third-party platform in International. We have launched merchants at International for the UK and Germany. Over time you will be seeing more and more partners selling our platforms so we are pleased with that. In terms of any specific announcements on timing, we generally do not announce specific times related to launches until they happen.

Imran Khan (JP Morgan): You talked about the inventory and stock selection increase, but it seems like your inventory grew 61% year-over-year, up from 36 and 33 in first and second quarter. Is there anything you are seeing into the quarter that increases your confidence to increase that inventory at that level?