Shutterfly photo-sharing site plans IPO

The online photo-sharing Web site Shutterfly plans to raise funds through an IPO of company stock.

The online photo-sharing Web site Shutterfly announced Thursday that it plans to raise funds through an initial public offering (IPO) of company stock.

Shutterfly, of California, will offer its stock on Nasdaq under the symbol SFLY. It has not set a date for the offering.

Shutterfly faces increasing competition for customer loyalty. The news comes as competing Web-based photo-sharing sites jostle for position in an increasingly crowded market.

New companies like Tabblo and Photobucket use Web 2.0 functionality to allow users to do more than post photos, such as editing pictures, arranging them on virtual photo album pages, and linking them to other sites.

Earlier this month, Yahoo Inc. joined those sites by announcing it would retool its Yahoo Photos site, allowing customers to use it like a desktop PC application, dragging-and-dropping photos, tagging them with labels and filing them in virtual albums.

Other sites have gained leverage by finding large corporate parents. In 2005, Hewlett-Packard Co. (HP) bought the photo-sharing sites Snapfish and Pixaco, and Yahoo purchased Flickr. In 2004, Google acquired photo organization technology developer Picasa, and in 2001, Eastman Kodak Co. bought Ofoto.

Shutterfly has built a strong brand name and is located in the fast-growing market of consumer photo printing, but it will face competitive challenges, analysts said.

"It could be a tough time to go public because now everyone is in the midst of a price war on the cost of basic printing, so that is dragging margins down," said Stephen Baker, director of industry analysis for NPD Techworld.

Still, not all photo-sharing sites are in direct competition, he said. Google is not a competitor to Shutterfly because it doesn't allow printing; people use Flickr to share photos and Picasa to organize them.

"I can't go to Flickr and get my photos printed on a mug, calendar or photo album," Baker said. "But they will compete with store kiosks in Wal-Mart, Walgreens, Costco ... those are not gnats, they are giants of industry."

Finally, Shutterfly will have to compete with people's ability to print at home, as hardware vendors like HP build color printers for consumers.

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