Amazon.com posted strong first quarter gains in profit and revenue, beating analyst expectations. The online retail giant said Q1 sales increased 18 percent to $4.89 billion from the same quarter 2008. Net income jumped 24 percent to $177 million, or 41 cents per diluted share.

Analysts had expected revenue of $4.75 billion and expected earnings to decline to 31 cents per diluted share -- citing Amazon's aggressive pricing and shipping deals to hold onto cost-conscious customers in the tough economy. But Amazon appears to be gaining ground in the recession.

"They're just kind of firing on all cylinders," said Dan Geiman, an analyst covering Amazon for Seattle brokerage McAdams Wright Ragen. "They've kind of developed that critical mass and they have a large enough customer base and enough products -- it's kind of this virtual circle they've talked about. It leads to higher and higher sales even when the economy's weak. It's another good quarter for them in all respects."

Geiman said Amazon undoubtedly took market share from online auction giant eBay but said it goes beyond that. "It was probably pretty much across the board where they took share, not only from ecommerce but from bricks and mortar as well," he said.

Foreign currency exchange rates hit Amazon's earnings. The company said if not for foreign exchange rate fluctuations, Q1 net sales would have grown 25 percent.

Amazon gave second quarter 2009 guidaince. The company said it expects net sales to be between $4.3 billion and $4.75 billion, or to grow between 6 and 17 percent compared with second quarter 2008.

In a statement, Bezos repeated his mantra that "Kindle sales have exceeded our most optimistic expectations."

The company said the number of items shipped by its Fulfillment by Amazon service on behalf of third-party sellers increased by more than 300 percent from the prior year.

Earnings conference call update:

Bezos was asked about "muda," the Japanese word for waste, which he talked about his recently released annual letter to shareholders. 

"There's still a lot of progress we can make," he said of eliminating waste at Amazon. "It’s very, very energizing for me to see how much opportunity is there.”

Bezos said part of the strategy with Amazon's streaming video service is to "make it very easy for partners to integrate the Amazon Voice on Demand into their set-top box or video display device."

Asked about Amazon's success in luring large enterprise customers to its cloud computing business, Bezos rattled off a handful of already-known customers, including Eli Lillly and Autodesk, and added that there are many more that "prefer not to be identified for competitive reasons." Interestingly, he said a "number of hedge funds are using EC2."

Amazon CFO Tom Szkutak talked about "strong growth" in electronics sales in North America and internationally and said Amazon "continued to add selection in those categories and continued to improve in-stock levels." He also said "pricing was very competitive."

Szkutak briefly addressed China -- which Bezos highlighted in his shareholder letter -- saying, "We're pleased with the business we have in China. It's growing. It's an interesting long-term growth opportunity for us."

Here's a graphic of Amazon's revenue numbers: