• Los Angeles Times, Wednesday, October 24, 2007 11:16 AM

As Amazon will tell you, Wall Street can be frustratingly tough to please. Despite quadrupling its third-quarter profit, the Web retailer saw its stock fall nearly 10% following its Tuesday earnings report. The reason: investors were already expecting a blowout quarter, but when the company announced a slight operating margin decline from the second quarter, they took that as a signal that the company's boom days were coming to a close.

Part of the problem is that Amazon is already trading at a price-to-earnings ratio that's higher than most Web companies. Investors are also particularly sensitive these days, looking for sound growth opportunities in the tech sector as the housing downturn and credit crunch continue.

Operating margins may have declined from 4% to 3.8%, but thanks to strong overall sales, up 41% to $3.26 billion, Amazon walked away from the third quarter with $80 million in profit, more than four times as much as the $19 million it took in in 2006. The company expects fourth-quarter sales to be in the neighborhood of $5.1 billion to $5.45 billion.

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