FTD Misses Q4 Estimates (FTD)

Citigroup analyst Mark Mahaney on online and telephone flower retailer FTD's December 29th earnings pre-announcement:

SUMMARY

• FTD announced that it experienced a 4%Y/Y decrease in Consumer orders in December, citing a significant increase in search engine costs and the company's resultant decision to not pursue high cost order volume. FTD also announced the sale of a small greeting cards business and announced that it had repurchased 252K shares under a $30MM repurchase program.
• FTD lowered its FY06 (June) revenue guidance from $480MM to $460MM, while maintaining its EBITDA guidance of $67.5MM, and increasing its EPS guidance from $0.75 to $0.76.
• Thus, we are lowering our FY06 revenue estimate from $473MM to $460MM and our EPS estimate from $0.78 to $0.76. No change in our Hold rating our $13 TP. Ramping marketing costs have been a consistent concern . Decreases in '07E and '08E revenue caused our similar downward EPS revisions.
• Modest positive derivatives are search providers Google and Yahoo!.