Amazon.com, the world's largest bookseller and e-retailer,  is expected to report fourth-quarter earnings per share sharply lower than the year-earlier period as weaker profit margins offset strong Kindle sales and a boom in e-commerce during the holiday season.

The Seattle-based company is expected to earn $91.6 million, or 19 cents a share, in the fourth quarter, nearly 80 percent below the $416 million, or 91 cents, in the year-earlier period, estimates carried by Reuters said. Revenue is expected to be $18.2 billion, about 40 percent greater than last year's $12.9 billion.

The company reports Tuesday after the market closes.

Amazon's strength in the quarter is expected to come from its sales in the Kindle family, most notably the Kindle Fire tablet, which hit the market in September. The company in mid-December announced that it had been selling more than a million Kindles each week during parts of the holiday season.

Tablets including iPad and Kindle Fire are rapidly taking share from PCs and notebooks, Stifel Nicolaus analyst Jordan Rohan said in a research note. Kindle Fire has staked out an important market position due to its loyal Amazon customer base and attractive (low) device pricing.

Analysts at Bank of America-Merrill Lynch estimate 8.3 million Kindle units were sold in the fourth quarter, bringing in $2.1 billion of both hardware and content revenue.   

Yet profit margins are expected to fall after the company slashed prices in the fourth quarter. The $199 Fire costs less than Apple's $499 iPad 2. Some analysts believe Amazon lost as much as $50 on each Fire sold, but Amazon hopes to make that money back on content sales.  

Other Kindles were even cheaper. The traditional Kindle costs $79 and the Kindle Touch costs $99. The Kindle Touch 3G costs $199.

Amazon also benefited from a boom in online shopping during the holiday season. Online retail spending reached $37.2 billion in the holiday season, up 15 percent from last year, digital analytics firm comScore found.

With brick-and-mortar holiday retail estimated to have grown about four percent this year, it's clear that e-commerce continues to gain market share from traditional retail due to the attractiveness of the Internet's convenience and lower prices, comScore chairman Gian Fulgoni said in a statement.

But customer demands for free shipping could pressure the company's bottom-line. Online shoppers made 37 percent more transactions during the holidays compared to the year earlier period, driving up the number of shipments, Chase Paymentech estimated.  Market researcher comScore found that 64.4 percent of all transactions had free shipping, up 10 percent from last year, leading to a lot more shipments on e-retailers' dime.

Amazon competitor eBay previously posted sales and profits that beat analyst expectations. Net income in the fourth quarter rose more than four times to $1.98 billion, or $1.51 a share, while revenue rose $3.38 billion, up 35 percent from the year earlier period.

Shares of Amazon were down 1.7 percent to $192.04 in afternoon trading, considerably below the 52-week high of $246.71, which was reached on Oct. 14.