Can a company go East after heading South? Digital photofinishing pioneer Shutterfly (NASDAQ:SFLY) is going to be putting some of its IPO money to good use by opening a second manufacturing facility on the East Coast after watching its stock sink below its initial $15 price tag.
It's a good move for Shutterfly. Even though the digital medium has no boundaries, Shutterfly's bread-and-butter business has been printing out photo books, prints, and photographic greeting cards. Opening up a second production center in Charlotte will now shave a few days off deliveries to areas that are far removed from its Californian roots.
Shutterfly is competing against companies like Kodak (NYSE:EK) and Hewlett-Packard (NYSE:HPQ) that already have cemented reputations as digital printing specialists, so any kind of advantage will come in handy.
Yes, being an exclusively online player grants the company a bit of leeway in carving out its role as an edgy alternative. Recent Web 2.0 enhancements on its photo-sharing site seem to indicate that the company wants to do more than simply burn your holiday photo DVD compilations or plaster your pet cat's face on a mug.
Shutterfly is also able to take some chances because it has been profitable since 2003. Along with its September IPO, the company is now flush with cash and can take some risks without worrying that one bad move will sink the entire company.
And, as far as big moves go, opening up a facility three time zones away and taking on 200 more employees is pretty significant. Hopefully it will be about more than getting that Thomas the Tank Engine-themed photo book out a couple of days sooner.
Twenty-one Motley Fool CAPS players pick Shutterfly to outperform the market. Twenty-five say it will underperform. Where do you stand? Join more than 13,000 fellow investors in the Fool's new stock-rating service and let your voice be heard .
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 has a disclosure policy.
