NEW YORK (CNN/Money) - Amazon.com reported a net loss for the first quarter but trounced Wall Street forecasts excluding one-time items, and also raised its sales forecast for the second quarter and the full year.

The world's biggest Internet retailer reported a net loss of $10 million but, excluding charges such as amortization of goodwill and stock-based compensation expenses, said it earned 10 cents a share in the quarter. Analysts were expecting a profit of 4 cents a share excluding items, according to First Call, which tracks earnings forecasts.

Amazon reported a net loss of $23 million a year ago. Excluding items, the loss was a penny per share.

Sales came in at $1.1 billion, up 28 percent from a year ago, and about in line with Wall Street's expectations.

Shares of Amazon (AMZN: Research, Estimates) jumped 13 percent to $28.40 in after-hours trading, according to Island ECN, after falling about 1 percent in regular trading.

The shares are up more than 33 percent year-to-date as Amazon, like other major Internet stocks eBay and Yahoo!, has benefited from expectations for strong sales and earnings growth.

Amazon said that it expects sales for the second quarter of $1 billion-to-$1.05 billion, above average forecasts of $963 million. And for the full year, Amazon said sales would be "$4.7 billion or more," while current estimates are about $4.7 billion.

But the company did not give earnings-per-share guidance. It did say that it was anticipating operating income of at least $275 million for the year. Analysts expect Amazon to post a profit of 2 cents a share in the second quarter and 32 cents a share for the year, excluding items.

There is no denying that the company is performing extremely well. Consumers have flocked to the site due to lower prices and free shipping for orders over $25.

"The company is being ultra-competitive on prices and that's propelling sales," said Dan Geiman, an analyst with McAdams Wright Ragen. He does not own Amazon and his firm has no investment banking relationship with the company.

Much of the sales growth was fueled by strength overseas. International sales increased 67.5 percent from a year ago, while North American sales increased 13 percent. International sales accounted for 35 percent of total sales.

During a conference call, Amazon CFO Tom Szkutak said that sales did dip across the board in late March and suspected that this was due to the war in Iraq. But he added that sales rebounded sharply during the first few weeks of April, leading the company to raise its sales guidance.

But once again, the focus is on Amazon's valuation. The stock is trading at 79 times 2003 average earnings estimates of 32 cents a share. But the estimate is for results excluding items.

Amazon has only reported two quarters of net profit, including charges and one-time items, in its history, and if this year's net profit comes in below 32 cents a share, the multiple based on net earnings would be even higher.

Dave Sherry, a portfolio manager with EGM Capital, a hedge fund focusing on telecom, media and technology stocks, said he is avoiding Amazon because of its valuation. Sherry said he's more interested in cheaper Internet stocks, such as USA Interactive (USAI: Research, Estimates), which is buying Expedia and Hotels.com. It trades at about 38 times 2003 earnings estimates.

And one fund manager who owns the stock admits that the heady valuations have him concerned. "I'd feel more comfortable if multiples were lower," said George Gilbert, co-manager of the Northern Technology fund. Although he owns shares of Amazon, he does not like the stock as much as eBay or Yahoo! (his No. 1 and No. 2 holdings) because of Amazon's lower profit margins.

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But so far, valuations don't seem to be scaring investors. EBay hit an intraday 52-week high Wednesday after it reported strong first quarter results and raised its sales and earnings guidance for the year Tuesday afternoon. Yahoo!, which reported solid earnings two weeks ago, also hit a 52 week high Wednesday.

Amazon is only trading 10 percent below its 52-week high. Based on the stock's after-hours performance on Thursday, a big opening is likely come Friday.

Todd Campbell, vice president with Alpha Equity Research, an independent research firm, said that given Amazon's strong results, investors will probably tolerate the valuation in the short-term, especially if the broader market continues to do well.

"As long as Amazon is showing continued strength on the top and bottom line and the overall market is picking up momentum, this stock will participate in the rally," said Campbell, who does not own shares of Amazon.

In a separate announcement, Amazon said that next month it would retire all of its 10 percent outstanding senior discount notes due May 2008 for $277 million. The company has $2.3 billion in long-term debt. Szkutak said the decision would not have a material impact on Amazon's cash flow. The company finished the first quarter with $1.1 billion in cash, up from $745 million a year ago.