) jumped 15.0% after Bloomberg reported that the online
photo-printing service provider has hired boutique investment bank
Qatalyst Partners LLC to find a buyer for itself.
Private-equity firms as well as e-commerce and web storage
companies are expected to bid for the company. However, the company
is in the early stages of seeking a buyer and might not reach a
The decision comes in the wake of back to back losses incurred by
the company. Shutterfly's business is highly seasonal and the
company generally posts losses in the first three quarters of the
In 2014, the company expects the bottom line to be in the range of
a loss of 8 cents to earnings of 13 cents for 2014, representing a
decline from 2013 levels. Other than seasonality, Shutterfly's
profits are being hurt by the termination of the Costco partnership
in 2013. Besides this, depreciation, labor, and equipment costs for
expansion and acquisition of manufacturing facilities are also
adversely impacting profitability.
Moreover, the company faces stiff competition from big players such
) who have been acquiring companies in the technology and Internet
space. These companies have better and effective resources to
leverage these acquisitions and would eventually eat into
Shutterfly's market share.
Shutterfly currently has a Zacks Rank #3 (Hold).
China Distance Education Holdings Limited
) is a better-ranked stock in the same sector with a Zacks Rank #1
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