So much for spreading some pre-holiday cheer, Amazon.com (NASDAQ:AMZN). The leading online retailer announced healthy third-quarter results, but then left shareholders with eggnog on their faces after warning of an uninspiring holiday quarter.

Let's start with the good news. The company's latest quarter was a strong one. Net sales rose 31% -- or 28% adjusted for foreign exchange movements -- to $4.3 billion. Operating margins contracted slightly during the period, but net earnings managed to soar 48%, to $0.27 a share. Mr. Market was looking for a profit of only $0.25 a share. Free cash flow inched 21% higher to $970 million.

Operating margins shrank as a result of stateside pricing pressures, with operating profits rising just 12% in North America despite a 29% uptick in sales. Operating margins actually expanded internationally, where a 28% increase in currency-adjusted sales growth was surpassed by a 39% spurt in operating income.

So what's with all of the gloom and doom this morning? Well, the company is talking down its current quarter's outlook, with Amazon hunkering down and resorting to aggressive pricing and subsidized shipping promotions to make sure that it doesn't get lost in the holiday shuffle.

It makes sense, of course. As soon as leading discounter Wal-Mart (NYSE:WMT) announced that it was slashing toy prices this holiday season, cheap-chic rival Target (NYSE:TGT) and small-box pure play KB Toys followed suit. Amazon has to compete with the real world, especially if consumers sense that there are better deals to be had by logging off and hitting local chain stores.

In a dot-com world where every competitor is a mouse click away, everyone is price sensitive. Perpetual online dealsmiths like Overstock.com (NASDAQ:OSTK) or Bidz.com (NASDAQ:BIDZ) may still win over crowds given their price-slashing reputations, but Amazon has to protect its turf as a catchall e-tailer. It will have to earn its sales during these penny-pinching times.

How bad will it get? Well, Amazon is looking at $6.0 billion to $7.0 billion in net sales during the pivotal holiday quarter. It's a wide range, but even the high end falls just short of the $7.05 billion that analysts had been expecting. If 6% to 23% in sales growth doesn't sound too bad, head a few lines lower on the income statement. The company is projecting operating income to clock in between $145 million and $305 million. It's also a wide range, but the midpoint implies a sharp drop in operating profits from last year's final quarter.

The silver lining here is that Amazon likes to underpromise and overdeliver. It didn't just beat Wall Street's quarterly estimates this past quarter -- or even three months ago. Amazon has come out ahead in eight of the past nine quarters.

It won't make investors any less nervous this time around, though. Amazon rarely has this dreary an outlook. The soft economy is real. Santa's looking like he lost some weight. As Alvin and the Chipmunks like to sing, "Please Christmas don't be late."

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Longtime Fool contributor Rick Munarriz has been shopping online for about as long as Amazon.com has been in business. He does not own shares in any of the stocks in this article. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy likes Simon best; it's the glasses.