Why Shutterfly Flew Higher -- Then Landed

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: After Shutterfly (NAS: SFLY) reported first-quarter earnings yesterday, shares of the shutterbug flew higher by as much as 10% this morning before coming back down near breakeven.

So what: Revenue in the quarter soared by 60% to $91.3 million, but it wasn't enough to generate a profit. The company's GAAP net loss widened to $10 million, or $0.29 per share. The initial pop may have happened because this bottom line was better than expected, as the Street was expecting Shutterfly to lose $0.34 per share.

Now what: A couple of months ago, Shutterfly offered to buy bankrupt Eastman Kodak's online photo business, and it expects the deal to close this week. Next quarter, the company expects revenue between $90 million and $92 million, although costs related to the Kodak deal will hurt the bottom line. Second-quarter GAAP net loss is expected to range from $0.33 to $0.37 per share.

Interested in more info on Shutterfly? Add it to your watchlist by clicking here.

At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool has adisclosure policy.
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