Amazon.com Inc on Thursday posted quarterly profit that handily beat Wall Street estimates and said holiday sales could come in far above expectations, sending its shares up 15 percent to their highest level in nearly a decade.

The world's largest online retailer also said its Kindle electronic reader was its top item in both unit sales and dollars across all of its product categories.

It's a strong September quarter, said Colin Gillis of Brigantine Advisors. They beat on the top and they beat on the bottom ... investors are going to be heartened that consumers are still spending.

Citibank's Mark Mahaney said Amazon must be taking market share based on its results.

Amazon should be extremely well prepared for Q4 -- facing shrinking/destocking offline retail competitors, with THE must-have eReader, and a significantly strengthening presence, wrote Mahaney in a note.

Wall Street expectations for Amazon have been high, and expected it to outpace the market during the crucial holiday season. But a growing price war with Wal-Mart Stores Inc means that margins could be at risk in coming months.

For the key holiday fourth quarter, Amazon said it sees revenue to range between $8.125 billion and $9.125 billion, compared with analysts' expectations for $8.13 billion.

The company forecast operating profit between $300 million and $425 million.

The problem with the guidance is, it is so wide you could drive a truck through it, said Gillis, adding Amazon had a history of providing a wide-ranging forecast.

E-READER CHALLENGE

Amazon's net profit in its third quarter was $199 million, or 45 cents per share, far above the average analyst estimate of 33 cents per share according to Thomson Reuters I/B/E/S. Year-ago profit was $118 million, or 27 cents per share.

Revenue rose 28 percent to $5.45 billion, the Seattle-based company said, compared to the Wall Street average estimate of $5.03 billion.

The profit you see is really driven by the leverage we got from our strong revenue growth, said Chief Financial Officer Tom Szkutak. We had very strong demand across categories and geographies.

Amazon has been rolling out new incentives to spur sales ahead of the holidays. Amazon has cut its prices on top pre-ordered hardback books to $8.99, following the aggressive lead of Walmart.com.

On Thursday, the American Booksellers Association asked the U.S. Department of Justice to investigate that online book price war involving Amazon, Walmart.com and Target Corp , calling it illegal predatory pricing damaging to the book industry.

To maintain its dominance in e-readers, Amazon cut the price of its Kindle to $259 from $299 and introduced a global version.

Asked whether Amazon would again lower the Kindle price before the holidays, Szkutak said the company was comfortable with the current price and would not comment on future plans.

Still, Amazon's Kindle faces its first major challenge with the debut this week of Barnes & Noble's Nook. That device is priced the same as Amazon's and offers features that may take market share from the online retailer.

Some analysts sought to put the Kindle in perspective, particularly as the company does not provide sales data.

By all indications, it's been a hugely successful product for them, but it's still a pretty small percentage of their revenues, said Dan Geiman, analyst at McAdams Wright Ragen.

Amazon recently bought online shoe retailer Zappos.com to venture further into footwear and apparel, and introduced same-day shipping in seven major U.S. cities.

In North America, sales rose 23 percent in the quarter, while internationally sales grew 33 percent, the company said.

Media sales, which had shown slowing growth in the previous quarter, rose a healthy 13 percent in North America. They had risen a mere 1 percent in the second quarter.

Shares -- which are up 82 percent since January -- rose nearly 15 percent to $107.33 in after-hours trade.

(Editing by Michele Gershberg and Leslie Gevirtz)

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