Shutterfly shares fall as photo pricing pressure looms
Jan 4 (Reuters) - Shares of online photo-sharing company Shutterfly Inc (SFLY.O: Quotazione) continued to fall for the second consecutive day Friday following a recent price cut on photo prints by rival Snapfish.
The stock also saw at least one brokerage lowering its rating.
In late December, Hewlett-Packard Co's (HPQ.N: Quotazione) Snapfish service reduced its everyday price on 4x6 prints to 9 cents from 12 cents, raising concerns among investors that it may be the beginning of a new "price war." Comparable price at rivals Shutterfly is 19 cents and Kodak Gallery is 15 cents.
According to Shutterfly Web site, it is offering 4X6 prints at 12 cents each for a prepaid plan.
"We believe it would be a challenge for the company to maintain a $0.10 pricing differential (regardless of customer demographics) without risking a potential slow-down in new customer growth," American Technology Research analyst Brad Manuilow said in a note to clients.
Redwood City, California-based Shutterfly shares have lost more than one-fourth of their value from Wednesday's closing price of $25.7. The stock touched a low of $18.62 in morning trade but recovered partially and were trading down $1.47 at $20.05 in afternoon trade on the Nasdaq.
The shares have lost about half of their value in the last two months.
Manuilow, who downgraded the stock to "neutral" from "buy," said assuming a 20 percent price cut offset by higher unit volumes, 2008 earnings per share could be hurt by 10 percent to 20 percent.
PRICE WAR Continua...