The long and short of the matter is that Shutterfly is far better off having paid out literally a few million dollars to acquire the online photo posting service of Eastman Kodak out of bankruptcy court.  This photo sharing business is a competitive one and you have not heard the last of the announcements out there on this front.  The hardest part to consider is just how many of these services are going to make money in the long haul.

Shutterfly shares are down almost 6% at $25.05 against a 52-week range of $21.34 to $64.45.

JON C. OGG

If you go back and review the tape, Shutterfly went from under $27 to over $31 on the news last month, but then shares came right back down when Facebook’s much more expensive deal to acquire Instagram was announced. Now that the Shutterfly acquisition is closing without rivals the stock is up over 5% back to $30.55.

Where this whole thing gets interesting is that Kodak Gallery being bought for $23.8 million is taking on an established entity with 70 or 75 million users and it is believed to be profitable on its own.  Using the Shutterfly leverage will only help drive the greenbacks further.  Facebook’s $1 billion or so gamble on Instagram is for a two-year old company with only a few employees and with effectively no revenues.

With Shutterfly buying Kodak Gallery it will be better able to let its new and existing users share and store digital images.  It will also allow for easier photo books, scrapbooking, making cards, and personalized albums.

Facebook’s effort is the new-world deal, but the old-world deal sure seems a lot like the new-world deal for less than 3% of the total consideration that Facebook is offering to Instagram.

JON C. OGG

Apple’s (NASDAQ: AAPL) earnings are better than even the highest expectations. (Reuters)

Facebook M&A activity may lengthen the time it takes to launch its IPO. (Reuters)

MasterCard (NYSE: MA) Spending Pulse reports that high gas prices have cut consumption. (Reuters)

LightSquared creditors join in an effort to get money from the troubled start-up. (Reuters)

Human Genome (NASDAQ: HGSI) will consider its options after rejection of a GlaxoSmithKline (NYSE: GSK) bid. (Reuters)

China sets an Internet crackdown after online rumors cause the central government problems. (WSJ)

Economic trouble in Europe does not hurt the returns of many U.S. manufacturers. (WSJ)

S&P cuts its outlook on India’s sovereign debt. (WSJ)

Many smaller banks cannot pay back TARP loans. (WSJ)

Google (NASDAQ: GOOG) to sell its new smartphone directly to the public. (WSJ)

If Greece breaks with current austerity measures, it may lose its membership in the eurozone. (WSJ)

India may set a $10 billion fund to supply energy to expand its economy. (WSJ)

Shutterfly (NASDAQ: SFLY) will buy Eastman Kodak’s online Kodak Gallery. (WSJ)

HTC continues to face trouble selling its phones in the U.S. (WSJ)

A study in the Academy of Management Journal shows that the mental health of job seekers improves after the shock of job losses goes away, but before they are rejected for new positions. (WSJ)

Banks attack Moody’s over potential downgrades. (WSJ)

Gas futures drop 16 cents over the past eight trading days. (WSJ)

The Securities and Exchange Commission examines whether movie studios used bribes to move into China. (NYT)

Much of Spain’s $876 billion in home mortgages are close to default, which may require bailout money to offset. (NYT)

Many top oil traders believe the price of Brent crude will stay high. (FT)

Spain lowers its central budget deficit. (Bloomberg)

Angela Merkel objects to a call from French presidential candidate Francois Hollande to move away from EU austerity plans. (Bloomberg)

Douglas A. McIntyre

Instagram is a free download for ‘fast beautiful photo sharing’ per the company’s website.  The quotes from the Instagram site noted, “It’s a fast, beautiful and fun way to share your photos with friends and family.  Snap a picture, choose a filter to transform its look and feel, then post to Instagram. Share to Facebook, Twitter, and Tumblr too – it’s as easy as pie. It’s photo sharing, reinvented.”

Instagram’s blog noted, “When Mike and I started Instagram nearly two years ago, we set out to change and improve the way the world communicates and shares. We’ve had an amazing time watching Instagram grow into a vibrant community of people from all around the globe. Today, we couldn’t be happier to announce that Instagram has agreed to be acquired by Facebook.”   Facebook has previously tried to acquire this company and Instagram recently closed on some new venture funding.

The news has Shutterfly, Inc. (NASDAQ: SFLY) down over 7% at $27.31 so far today against a 52-week trading range of $21.34 to $66.70.

Paying $1 billion for a photo sharing service may be a hard sell for Wall Street analysts seeking to identify how to value companies in the social media space.  We’ll leave this one up to you. When you have a market value of $80 to $100 billion in a pre-IPO goal, maybe overpaying is somehow good.

JON C. OGG

Dow Jones recently ran the notion in its bankruptcy services that certain common stockholders believe that the patents could be worth more than the $3.4 billion to $4.0 billion that the company has projected.  We think that this is an interesting view because most public company bankruptcies like this generally wipe out the common holders.

Shutterfly, Inc. (NASDAQ: SFLY) was recently reported on winning a stalking horse bid for Kodak’s digital portfolio and shares have risen handily since that news came out.  It turns out that a few million spent will generate millions of new accounts and shares are now up almost 20% since then.

Creating a shareholder committee would not assure that there is value left.  It may help, but this bankruptcy process is still far from over.  At $0.29, Kodak’s OTC stock is only a penny above its 52-week low per Yahoo! Finance data.  That is not representative of a lot of value, but it is at least not just a few cents as many other bankruptcy stocks go down to.

We are still considering this one a work in process.

JON C. OGG

The unofficial closing bells put the DJIA down nearly 3 points to12,977.57 (-0.02%), the NASDAQ fell nearly 13 points -0.43%) to 2,976.19, and the S&P 500 fell -0.32% or nearly 4.5 points to 1,369.63.

There were several analyst upgrades and downgrades today, including Travelers Companies (NYSE: TRV) cut to ‘equal weight’ at Morgan Stanley; Lowe’s Companies (NYSE: LOW) raised to ‘equal weight’ at Morgan Stanley; Motorola Solutions Inc. (NYSE: MSI) raised to ‘outperform’ at Credit Suisse; MetroPCS Communications Inc. (NYSE: PCS) maintained as ‘buy’ with $15 target price at Argus; and Monster Worldwide Inc. (NYSE: MWW) cut to ‘neutral’ at UBS.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Big Lots Inc. (NYSE: BIG) is down -4.2% at $42.61; Genesco Inc. (NYSE: GCO) is up 4.2% at $73.58 after posting a new 52-week high of $74.89 earlier today; Biofuel Energy Corp. (NASDAQ: BIOF) is up 5.5% at $0.76; and Einstein Noah Restaurant Group Inc. (NASDAQ: BAGL) is up 3.6% at $14.99.

Here’s our preview of next week’s earnings announcements.

Other standouts from today include the following stocks:

Yelp Inc. (NYSE: YELP) is up nearly 64% at $24.55 following its IPO at $15/share this morning. Move coverage here.

Shutterfly Inc. (NASDAQ: SFLY) is up 16% at $31.22. The social networking company has struck a deal with Eastman Kodak Co. (EKDKQ) to provide a stalking-horse bid for some of Kodak’s assets. More coverage here.

Vringo Inc. (AMEX: VRNG) is up more than 13% at $1.63. The social network app maker is probably getting a bump from the success of Yelp’s IPO.

U.S. Auto Parts Network Inc. (NASDAQ: PRTS) is down more than -19% at $4.00. The retail parts auto parts distributor missed consensus estimates last night.

Overstock.com Inc. (NASDAQ: OSTK) is down more than -11% at $6.11 after posting a new 52-week low of $5.89 earlier this morning. The online discounter posted an unexpectedly quarterly loss this morning.

Stay tuned for Monday. We have noted the following events on the schedule (all times Eastern):

• 10:00 a.m. – Factory orders
• 10:00 a.m. – ISM non-manufacturing index
• 11:30 a.m. – 3- and 6-month Treasury bill auction

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Paul Ausick

Among the major movers at around noon today are Yelp Inc. (NYSE: YELP), Shutterfly Inc. (NASDAQ: SFLY), Quepasa Corp. (AMEX: QPSA), U.S. Auto Parts Network Inc. (NASDAQ: PRTS), and Overstock.com Inc. (NASDAQ: OSTK).

Yelp is up more than 62% at $24.33 following its IPO at $15/share this morning. Volume is over 14 million shares traded. Move coverage here.

Shutterfly is up nearly 19% at $32.00. Volume is already nearly triple the daily average of about 1.46 million shares traded. The social networking company has struck a deal with Eastman Kodak Co. (EKDKQ) to provide a stalking-horse bid for some of Kodak’s assets. More coverage here.

Quepasa is up more than 12% at $4.56. Volume is already more than double the daily average of about 600,000 shares traded. The Spanish-language social networking company reported better-than-expected revenues, but a net loss last night.

U.S. Auto Parts is down more than -19% at $3.99. Volume is already about 4x the daily average of around 64,000 shares traded. The retail parts auto parts distributor missed consensus estimates last night.

Overstock.com is down nearly -13% at $6.00 after posting a new 52-week low of $5.89 earlier this morning. Volume is already more than 5x the daily average of around 117,000 shares traded. The online discounter posted an unexpected quarterly loss this morning.

Paul Ausick

There are several stocks trading more heavily than usual this morning, and also experiencing large gains or drops in share prices. These include the Shutterfly Inc. (NASDAQ: SFLY), Quepasa Corp. AMEX: QPSA), Golfsmith International Holdings Inc. (NASDAQ: GOLF), Motricity Inc. (NASDAQ: MOTR), and Overstock.com Inc. (NASDAQ: OSTK).

Shutterfly is up more than 19% at $32.11. Volume is already double the daily average of about 1.46 million shares traded. The social networking company has struck a deal with Eastman Kodak Co. (EKDKQ) to provide a stalking-horse bid for some of Kodak’s assets. More coverage here.

Quepasa is up more than 9% at $4.44. Volume is already higher than the daily average of about 600,000 shares traded. The Spanish-language social networking company reported better-than-expected revenues, but a net loss last night.

Golfsmith is down more than -10% at $3.99. Volume is already more than 3x the daily average of around 7,500 shares traded. The sporting goods maker badly missed both earnings and revenue estimates.

Motricity is down more than -14% at $1.13. Volume is already about half the daily average of around 1.8 million shares traded. The mobile services provider badly missed both revenue and EPS estimates last night.

Overstock.com is down about -12% at $6.05 after posting a new 52-week low of $5.89 earlier this morning. Volume is already nearly 4x the daily average of around 117,000 shares traded. The online discounter posted an unexpectedly quarterly loss this morning.

Paul Ausick

The unofficial closing bells put the DJIA up about 125 points to 12,294.68 (1.03%), the NASDAQ rose more than 19 points (0.74%) to 2,618.64, and the S&P 500 rose 0.9% or more than 11 points to 1,265.31.

There were several analyst upgrades and downgrades today, including American Eagle Outfitters Inc. (NYSE: AEO) cut from ‘buy’ to ‘hold’ at Standpoint Research; RAM Energy Resources Inc. (NYSE: RAM) raised from ‘market perform’ to ‘outperform’ at Rodman; Trius Therapeutics Inc. (NASDAQ: TSRX) started as ‘outperform’ at Robert W. Baird; Walgreen Co. (NYSE: WAG) maintained as ‘hold’ with a lowered price target of $36 at Jefferies; and Scana Corp. (NYSE: SCG) maintained as ‘buy’ with raised price target of $43 at Wunderlich.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: Bioanalytical Systems Inc. (NASDAQ: BASI) is up more than 15% at $1.60 and CalAmp Corp. (NASDAQ: CAMP) is down more than -19% at $4.13. All told a light day for earnings reports.

Other standouts from today include the following stocks:

RAM Energy Resources Inc. (NASDAQ: RAM) is up nearly 21% at $2.43. The independent oil & gas company continues its run from yesterday, when if finished up more than 70% on news of re-listing on Nasdaq and a $550 million private equity investment.

North American Energy Partners Inc. (NYSE: NOA) is up more than 33% at $6.98. The oil field services company will resume its contract with Canadian Natural Resources Ltd. (NYSE: CNQ) pending a final contract signing.

First Acceptance Corp. (NYSE: FAC) is up nearly 33% at $1.36. A director of the insurance company bought 200,000 shares on Wednesday.

PHH Corp. (NYSE: PHH) is down more than -5% at $10.53. The mortgage servicer’s credit ratings were cut yesterday at S&P  and the fallout continues.

Mead Johnson Nutrition Co. (NYSE: MJN) is down about -5.5% at $64.97. The food processing company had its Enfamil infant formula recalled at Wal-Mart Stores Inc. (NYSE: WMT) yesterday, and Walgreen’s, Safeway, Kroger, and Supervalu stores followed today.

Shutterfly Inc. (NASDAQ: SFLY) is down nearly -5% at $23.89. The Internet photo site cut its fourth-quarter guidance this morning.

Markets are closed Monday, December 26. Stay tuned for Tuesday. Here are the noteworthy events on the schedule (all times Eastern):

• 9:00 a.m. – S&P Case-Shiller housing price index
• 10:00 a.m. – Conference Board consumer sentiment index
• 10:00 a.m. – State Street investor confidence index

Have a Merry Christmas Day and great weekend.

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Paul Ausick

The unofficial closing bells put the DJIA up nearly 489 points to 12,044.55 (4.23%), the NASDAQ rose nearly 105 points (4.17%) to 2,620.34, and the S&P 500 rose 4.33% or nearly 52 points to 1,246.94.

There were several analyst upgrades and downgrades today, including Home Depot Inc. (NYSE: HD) reiterated as ‘buy’ with a $46 price target at Argus. Other ratings actions included Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) reiterated as ‘buy’ with a $94 price target at Canaccord Genuity; Netflix, Inc. (NASDAQ: NFLX) cut to ‘underperform’ at Wedbush; Suntech Power Holdings Co. Ltd. (NYSE: STP) reiterated as ‘hold’ at Argus; Transocean Ltd. (NYSE: RIG) cut to ‘hold’ at Argus; and Calpine Corp. (NYSE: CPN) cut to ‘hold’ at Jefferies. See our story on Transocean’s stock offering and proposed debt offering.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: American Eagle Outfitters Inc. (NYSE: AEO) is up 3.3%, at $13.87; The Fresh Market, Inc. (NASDAQ: TFM) is up 5.7%, at $38.73; Jos. A. Banks Clothiers, Inc. (NASDAQ: JOSB) is down -6%, at $48.09; and SeaDrill Ltd. (NYSE: SDRL) is up 6.3%, at $34.82. After markets close today, Aeropostale, Inc. (NYSE: ARO) and Krispy Kreme Doughnuts Inc. (NYSE: KKD) will report earnings.

Several other standouts from today are as follows…

Zoltec Companies, Inc. (NASDAQ: ZOLT) is up 41.5%, at $8.11. The advanced materials maker reported better-than-expected earnings after markets closed yesterday.

Advanced Analogics Technologies, Inc. (NASDAQ: AATI) is up 32.5%, at $5.75. The power management chip maker is being acquired by Skyworks Solutions Inc. (NASDAQ: SWKS) for $258.6 million, or about $6.05/share.

Patriot Coal Corp. (NYSE: PCX) is up 18.7%, at $10.30.  This coal miner, like virtually all its competitors, is down about -40% for the past 12 months. There’s no news to justify today’s price jump, but the company’s thermal coal does sell well in cold weather.

Avalon Rare Metals Inc. (AMEX: AVL) is up 20.3%, at $3.26. The rare earths miner made this big move on no news, but competitor Molycorp Inc. (NYSE: MCP) did a deal with two Japanese companies to manufacture very powerful magnets in Japan for use in wind turbines and other high-tech products.

JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is up 16.6%, at $1.80. The solar PV maker is among several Chinese solar companies moving up today, no doubt as these are considered the most likely to survive a shakeout in the solar manufacturing sector.

Shutterfly, Inc. (NASDAQ: SFLY) is down -12%, at $27.02, after posting a new 52-week low of $26.93 earlier today. The social media company is facing intense competition for its on-line photo products.

Stay tuned for Thursday. Here’s a list of other noteworthy events scheduled for tomorrow(all times Eastern):

• 8:30 a.m. – New unemployment claims
• 9:45 a.m. – Bloomberg consumer comfort index
• 10:00 a.m – Industrial Supply Management manufacturing index
• 10:30 a.m. – EIA natural gas weekly report
• 4:30 p.m. – Federal Reserve balance sheet
• 4:30 p.m. – Money supply report

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