Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Shutterfly (NASDAQ:SFLY) fell by as much as 14% early Friday, then partially recovered to trade down around 6% as of 2 p.m. after the company announced better-than-expected fourth-quarter results, but followed with disappointing guidance.
So what: Quarterly revenue climbed 18% year over year to $483.3 million, which translated to adjusted net income that more than doubled to $2.57 per diluted share. Analysts, on average, were looking for earnings of $2.50 per share on revenue of $477 million.
Unfortunately, for the current quarter Shutterfly anticipates revenue to increase 11.6% to 14.5%, to a range of $153 million to $157 million, which will result in an adjusted net loss per share of $1.36 to $1.20. Wall Street was modeling a much narrower loss of $0.88 per share on higher sales of $159.5 million
In addition, for the full year 2015 Shutterfly sees revenue of $1.04 billion to $1.06 billion, or a year-over-year increase of 12.8% to 15%, and adjusted net earnings per share in the range of a $0.12 loss to net income of $0.04. Analysts were expecting 2015 earnings of $0.28 per share on sales of $1.05 billion.
Now what: To Shutterfly's credit, CEO Jeffrey Housenbold noted those results anticipate a "series of strategic initiatives to drive increased scale efficiencies and operating margins from the consolidation of several of our technology platforms, the closure of our sub-scale Elmsford manufacturing facility, and the shutdown of our Treat brand."
After those initiatives are implemented, Shutterfly should emerge a more efficient business poised to capitalize on and gain share in its core markets. For now, however, I prefer to remain on the sidelines to observe how its efforts progress over the next few quarters.
Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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