Shutterfly's (NASDAQ:SFLY) transformation into a premium photo-products specialist continues. The company's third-quarter results confirm that move, with the company's original photo-finishing business falling by 8%, while its personalized-products segment climbed 32%.

Shutterfly's picked a good place to be, distancing itself from the cutthroat ways of online print specialists like Hewlett-Packard's (NYSE:HPQ) Snapfish and Kodak's (NYSE:EK) Gallery.

Sure, everyone is hopping on Shutterfly's train of slick storyboard photobooks, greeting cards, and other personalized gifts, but it's an easier stronghold to defend than your basic "pennies a print" photofinishing services. 

Shutterfly's shift ultimately adds up to a 10% surge in overall third-quarter revenue growth to $36 million, ahead of the mere 5% top-line advance that Wall Street was expecting. Shutterfly's quarterly loss of $0.11 a share turned out to be half as bad as Mr. Market was bracing for.

An emphasis on more than prints is serving the company well in other ways, too. The company processed the same number of orders as it did a year ago, but the average size of those 1.7 million orders grew 11% to $21.71. Roughly 78% of the orders were placed by existing customers, a show of customer loyalty that seems to validate Shutterfly's quality .

Unfortunately, things get hairy after that. Shutterfly is only expecting $89.3 million to $104.3 million in revenue during the telltale holiday quarter, well below the $114.9 million analysts were targeting. The midpoint of that wide range is actually below the $97.5 million the company rang up during last year's fourth quarter. Projected profitability of $0.26 a share to $0.49 a share is also well shy of its year-ago $0.63 a share.

The upside for new investors is that Shutterfly is trading well below the $37 high it hit last October. Its fundamentals may have slipped, but the actual share price has disproportionately plummeted into the single digits.

Shutterfly's recent foray into social photo-sharing won't make a dent in industry leaders like Yahoo!'s (NASDAQ:YHOO) Flickr or American Greetings' (NYSE:AM) Webshots. Its growing business in premium personalized photobooks may also run headlong into consumers' dwindling supply of disposable income.

However, Shutterfly's annual profitability and its skillful positioning during the lull are commendable. It may not be the prettiest picture right now, but shake it for a bit and see what develops.

Three more snapshots to look into:

Longtime Fool contributor Rick Munarriz has never tried to shake it like a Polaroid picture. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy never needs a darkroom.