September 29, 2006
Shutterfly Shares Rise After IPO
The Wall Street Journal Online
 
Digital photo Web site Shutterfly Inc. gained in trading Friday, its first day as a public company.

Shutterfly, based in Redwood City, Calif., sold 5.8 million shares at $15 - the high point of its expected price range, which was set by underwriter JP Morgan Chase & Co. The stock closed up 55 cents, or 3.7%, at $15.55.

Shutterfly, which launched in 1999, operates an Internet Web site where people can upload, share and order prints of their digital photos. Netscape co-founder Jim Clark owns about 30% of the company after the IPO.

In the first six months of this year, the company's net revenue rose 34% to $36.5 million, compared to the same period in 2005, as customers ordered more prints and print-related merchandise such as calendars and greeting cards. The company's net loss widened to $3.7 million from $1.3 million in the first half of last year as its operating expenses outpaced revenue gains.

Shutterfly's business is highly seasonal, with nearly half of its annual revenue generated in the fourth-quarter holiday season; it ended 2005 with a net profit.

Besides its seasonality, Shutterfly's business is very competitive - it has been faced with price wars from rivals in its main revenue-generating business of printing pictures. The company warned that if any future price cuts aren't accompanied by a concurrent increase in the volume of orders, it could affect its results.