A Disappointing Shutterfly Is Under Serious Pressure

Shutterfly (SFLY) shares, which traded off Wednesday and then rebounded modestly in after hours trading, are sharply lower this morning following disappointing first quarter results and a disappointing outlook.

As I noted yesterday, the company’s Q1 revenues were short of expectations, and the company provided disappointing guidance for both the second quarter and all of 2008. The company posted Q1 revenue of $34.3 million, short of the Street consensus of $35.61 million; Shutterfly lost 15 cents a share in the quarter, in line with expectations.

For Q2, the online photo service sees revenue of $35 million to $38 million, short of the consensus of $39.8 million, with a loss of 19-24 cents a share, worse than the Street estimate of a loss of 15 cents. Shutterfly sees revenue for the full year of $225 million to $245 million, shy of Street expectations of $252 million. The company sees an EPS profit for the year of 30-50 cents a share; the Street has been looking for 44 cents.

Domenic LaCava, an analyst at Canaccord Adams, notes that the company blamed its woes in part on soft discretionary consumer spending. He notes that growth in prints fell to 17% year over year, from 39% in the previous quarter and 30% a year ago; he thinks pricing pressure is contributing to the slowdown. LaCava noted that total orders were up 26%, below the 38% growth he had expected. He also notes that marketing spend per new customer was up 20%. LaCava repeated his Hold rating on the stock.

Troy Mastin, analyst at William Blair, thinks the economy, and not pricing issues, are what ails the company. Mastin trimmed estimates, but maintains that the stock is cheap, and repeated his Outperform rating. Several other analysts took a similar stance; Jefferies analyst Youssef Squali this morning labeled the stock “a bottom fisher’s special.”

Nonetheless, the stock is under serious pressure: SFLY is off $3.51, or 21.5%, to $12.84. (Interesting that yesterday, before the announcement, the stock had dropped $1.48, or 8.3%; some people guessed right on how the quarter was going.)

Comments

[Tom B]

Shutterfly could benefit if idiot Ballmer gets his hands on Yahoo, and, thus, Flickr. Obviously, Flickr would be totally useless from the time Redmond started messing with it, just like they ruined HoTMail.