Will Wall Street let Amazon act like a startup?

The Seattle juggernaut that wants to be a dominate player in selling toys, household goods, fashion, books, cloud computing, electronic devices, shoes, videos, movie gossip, health and beauty aids, diapers (have I missed something?) has been raking in the revenue this year.

But Amazon (NYSE: AMZN) also has been spending heavily to rule those tech and commerce worlds. The results of that spending were glaring in its most recent quarterly earnings.

In reporting third-quarter financial results Tuesday (Oct. 25), Amazon said net sales increased 44 percent to $10.88 billion in the third quarter, compared with $7.56 billion in third quarter 2010.

Net income, meanwhile, decreased 73 percent -- to $63 million, or 14 cents per share, compared with $231 million, or 51 cents per share, in the third quarter of 2010.

Amazon’s operating margins as a percentage of worldwide sales have narrowed over the last four quarterly reports, slipping from 3.7 percent a year ago to 3.3 percent, then 2 percent, then 0.7 percent in this latest quarter.

For the fourth quarter, Amazon projected that its bottom line from operations could land anywhere between a loss of $200 million and a profit of $250 million.

Amazon investors seem to be showing less tolerance for Amazon’s strategy of making heavy investments in its business at the expense of profits. Amazon’s stock fell more than $25 in after-hours trading Tuesday, following the earnings report. And the company’s stock was down nearly 10 percent Wednesday morning, trading at just over $200 a share.

But not all the news was bad.

Much of Amazon’s growth has been focused on the e-commerce giant’s retail operations. Amazon has ramped up its plans for its massive distribution centers and has 17 set to open by the end of the year. That would bring the total to 69.

And the company made a big splash in the third quarter with new Kindle products, including Kindle Fire, its tablet aimed at taking marketshare from the best-selling iPad from Apple (NYSE: AAPL).

To compete with Apple’s iPad, Amazon has aggressively priced the red hot Kindle Fire. The $199 price tag is less than half of the $499 iPad price -- and $50 less than it costs to develop each tablet, according to analysts.

Analysts have raised questions about the strategy.

Gene Munster, with Minneapolis-based Piper Jaffray, said Amazon is likely losing money on Kindle Fire.

But in a conference call with investors Tuesday, Amazon CFO Thomas Szkutak said the company was taking a long-term perspective. Instead of focusing on short-term profits from Kindle Fire, the company is looking at the Kindle's “lifetime value” as a platform to sell customers books, videos and magazine subscriptions, as well to make money from Amazon Special Offers, which come bundled with ads.

“We think about the economics of the Kindle business, we think about the totality,” Szkutak said. “We think of the lifetime value of those devices. So we’re not just thinking about the economics of the device and the accessories. We think about the content.”

Analysts with J.P Morgan say they expect Amazon to sell 4 million to 5 million Kindle Fire tablets during the upcoming holiday season, mainly due to the low price point, which is below the $250 price tag analysts were expecting.

According to research from Gartner, Apple’s iPad is projected to account for 73 percent of worldwide media tablet sales in 2011. That is down from an 83 percent share in 2010. Gartner said that beyond Apple iOS and the Android operating system, no other platforms are expected to have more than 5 percent share of the tablet market in 2011.