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Shutterfly Lowers 4Q Outlook - Analyst Blog

Redwood City, California-based Shutterfly, Inc ( SFLY) recently trimmed its revenue and adjusted EBITDA outlook for the fourth quarter of 2011, due to the challenging economic conditions and fierce discounting war among the competitors during the crucial holiday season.

For the upcoming fourth quarter of 2011, the provider of Internet-based personal publishing services slashed its net sales forecast to $259 million - $264 million from the previous range of $270.5 million - $275.5 million and adjusted EBITDA guidance to $84 million - $88 million from the earlier projection of $96.3 million - $101.1 million.

This was very disappointing; as the company generates a large portion of its earnings during the fourth quarter of every fiscal year, which is the holiday season. The company generates more than 50% of revenues in the fourth quarter. Subsequent to the announcement, the company's shares continued to trade at a lower price. The share price of the online photo site tumbled $1.14 to close at $23.96 on Friday and fell 53 cents to close at $23.43 on Tuesday.

In the recently concluded third quarter of 2011, Shutterfly reported adjusted loss of 15 cents per share, much narrower than the Zacks Consensus Estimate of a loss of 37 cents. The better-than-expected earnings were driven by strong demand for photo-book along with considerable contribution from the cards and stationery collection as well as significant synergies realized from the Tiny Prints acquisition. Net revenue increased a whopping 56% year over year to $76.5 million on the back of higher revenues from personalized products and services.

For the fourth quarter of 2011, the company expects GAAP earnings in the range of 98 cents to $1.03 per share.

For fiscal 2011, Shutterfly expects net revenue to range between $480 million and $485 million. On a GAAP basis, earnings are estimated between 42 cents and 46 cents per share.

The Zacks Consensus revenue Estimate for the fourth quarter of 2011 and fiscal 2011 are pegged at $262 million and $471 million, respectively. We expect estimates to go down in the coming days as the company trimmed its guidance for the coming quarter.

Shutterfly, which faces stiff competition from LookSmart Ltd. ( LOOK ), Hewlett-Packard Company ( HPQ ),expects to report its fourth quarter 2011 results on February 1, 2012.

Shutterfly currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

HEWLETT PACKARD ( HPQ ): Free Stock Analysis Report

LOOKSMART LTD ( LOOK ): Free Stock Analysis Report

SHUTTERFLY INC ( SFLY ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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