On Tuesday, Amazon.com (AMZN) reported fourth-quarter results that disappointed most investors. Though traders continue to dabble in the firm’s shares, we would continue to steer clear of the online retailer. Our fair value estimate range for the company remains unchanged. Net sales increased 35% in the fourth quarter, falling below the firm’s full-year growth rate and disappointing even the most conservative forecasts. Operating income declined significantly during the period, while net income also fell by more than half, to $0.38 per share. On a full-year basis, the company earned $1.37 per share, down 45%. Though revenue growth missed consensus expectations and earnings performance was poor, the company still hauled in over $2 billion in free cash flow for the year. Looking to the first quarter of 2012, Amazon expects net sales to advance as much as 36% and operating income to fall into the red based on the midpoint of the guided range of a loss of $200 million and a gain of $100 million. We’re not compelled to be active in Amazon’s shares until the firm can demonstrate meaningful and sustainable earnings expansion.
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