McDonald's Corp. served notice Monday that sales at U.S. restaurants open at least a year were flat last month as consumers tightened their wallets, heightening concerns on Wall Street even as it reported fourth-quarter profits of $1.27 billion.

Its stock fell sharply.The world's largest fast-food chain also cited severe winter weather as a reason for the weakness in U.S. comparable sales, which were more than offset by international sales gains. But investors worried about the impact of a possible recession overlooked the impressive fourth-quarter results, which capped a strong year for McDonald's, focused instead on slowing sales and sold McDonald's stock heavily.

Shares in the Oak Brook, Ill.-based company, already down 7 percent since the first evidence of a December sales slowdown surfaced two weeks ago, shed another $3.45, or 6.4 percent, to $50.65 in morning trading.

"Weak U.S. trends are likely to put some pressure on the stock until investors have a sense of whether December was a one-month outlier or a new trend," RBC Capital Markets analyst Larry Miller said in a note to investors.

Net income for the October-through-December period amounted to $1.06 per share, up from $1.24 billion, or $1 per share, during the same period a year earlier.

Excluding income tax benefits of 33 cents per share, the company earned 73 cents per share, beating analysts' consensus estimate of 71 cents per share, according to a Thomson Financial poll.

Revenue rose 6 percent to $5.75 billion from $5.45 billion in the fourth quarter of 2006, also topping Wall Street's $5.61 billion estimate.

Global same-store sales rose 6.7 percent for the quarter.

Despite the December weakness, CEO Jim Skinner said the company remained confident in its U.S. business — its biggest market with close to 14,000 restaurants. U.S. comparable sales have risen for 19 consecutive quarters.

"Our strategic initiatives, anchored by McDonald's three-tiered menu of premium, core and dollar menu options, position us well to grow sales and build customer loyalty in 2008 and beyond," Skinner said in a statement.

For the full year, McDonald's profits fell 32 percent to $2.4 billion, or $1.98 per share, from $3.5 billion, or $2.83 per share, a year earlier. Revenue climbed 9 percent to $22.8 billion from $20.9 billion. The full-year results were weighed down by a hefty one-time charge for the sale of some Latin American operations.

Also Monday, McDonald's said it would also begin to pay dividends quarterly.

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