The extent of Wall Street’s nervousness about the outlook for corporate America was expressed loudly yesterday after Amazon, the online books-to-DVDs retailer, suffered a sharp slide in its share price despite surging sales.

Profits during the fourth quarter of the year more than doubled, while revenues at the internet retailer jumped 42 per cent over the three month period, beating Wall Street expectations.

However, despite the buoyant growth, New York focused on a slide in gross profit margins over the same quarter, indicating that Amazon had sought to discount goods heavily to stimulate sales.

In after-hours trading on Wall Street, shares in the group fell 3 per cent even though Jeff Bezos, the chief executive, was more upbeat about the current quarter’s performance than Wall Street had expected.

Mr Bezos said that he expected to produce sales of between $3.95 billion (£2 million) and $4.15 billion for the current quarter, contributing to between $18.75 billion and $19.75 billion of revenues for 2008 as a whole.

Analysts had predicted $3.92 billion in sales in the first quarter, and $18.25 billion in revenue for the year.

For the last quarter of the year, Amazon said that sales outside North America had outpaced home revenues. Sales in the United States and Canada rose 40 per cent to $3.08 billion, while sales to other countries climbed 46 per cent to $2.59 billion. Revenues derived from Amazon’s largest business segment, which includes books, music and films, grew 33 per cent to $3.33 billion worldwide in the quarter. Sales of electronic goods and general merchandise such as wine glasses rose 58 per cent to $2.21 billion.

In a statement released last night, Mr Bezos attributed the strong quarter to “continuously improving the customer experience”.

Hamed Khorsand, an analyst at BWS Financial, noted that gross profit margins were down from a year ago and the previous quarter. “That was disappointing,” he said.

“It seems that there was a lot of promotions, discounting in the quarter. The operating income outlook doesn’t look too great.”

Fourth-quarter gross margin came in at 20.6 per cent, having fallen from 21.3 per cent a year earlier and 23.4 per cent in the third quarter. Net profits rose 112 per cent to $207 million from $98 million, a year ago. Sales rose 42 per cent to $5.67 billion in the quarter.

But Tom Szkutak, the group’s finance director, insisted yesterday that the company was “doing fine”, downplaying growing concerns that weaker consumer spending could put pressure on the internet retailer’s results this year.

Asked whether the company had been forced to lower prices in response to weaker consumer demand, Mr Szkutak said that there was “nothing different” about the way that Amazon adjusted prices during the quarter.

Martin Pyykkonen, an analyst at Global Crown Capital, said that Amazon’s revenue outlook showed that it was not concerned about the current retail environment.

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