Trefis Top 5 – May 31 Insights (SFLY, NOK, EXPE, SIRI, EMC)

For our Tuesday insights recap, we wrote on Shutterfly‘s (NASDAQ:SFLY) strategy of making acquisition and partnerships like its purchase of Tiny Prints for $333 million. We look at Nokia’s (NYSE:NOK) announcement that shocked the market leading to a 15% sell off. Expedia (NASDAQ:EXPE) announced its partnership with AirAsia and we we explore what benefits could come from this as well as other partnerships like its announced plans with South Africa Airways. Sirius XM (NASDAQ:SIRI) reported solid Q1 results and subscriber growth had rebounded in step with the rebound in the auto market. Finally, we note that EMC‘s (NYSE:EMC) VNX storage platform could have NetApp (NASDAQ:NTAP) squirming as this would challenge the dominant player in the unified storage market.

Acquisitions and Partnerships Drive Shutterfly’s Growth

Shutterfly (NASDAQ:SFLY) completed the acquisition of Tiny Prints on 25th April, 2011 for $333 million which included approximately $146 million in cash and approximately 4 million shares of Shutterfly common stock ^[1]. Tiny Prints Inc. is a privately held e-commerce company offering stylish cards, invitations, personalized stationery and photo books operating in the same vertical as Shutterfly. Acquisitions of this nature will help Shutterfly grow its customer base and compete with online services like Hewlett-Packard’s (NYSE:HPQ) Snapfish, Kodak EasyShare Gallery and American Greetings’ Photoworks and Webshots brands. Increasingly Wal-Mart (NYSE:WMT), Costco (NASDAQ:COST) and Sam’s Club also offer low cost digital photography products and services and compete in this market.

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Evaluating Expedia’s Upside from AirAsia Partnership

In a recent article, Expedia Partners With AirAsia, we explored the rationale behind the recently announced alliance between Expedia (NASDAQ:EXPE) and the leading budget carrier in Asia, AirAsia. The joint venture will sell flights, hotel bookings and holiday packages in Southeast Asia, the world’s fastest growing aviation and tourism market. Expedia competes with other leading online travel agencies such as Priceline (NASDAQ:PCLN), Orbitz (NASDAQ:OWW) and Travelocity. We value Expedia with a $30.60 Trefis price estimate of its stock, which is roughly 10% premium to its current market price. Below we explore the potential impact of the Expedia-AirAsia deal.

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Nokia’s Worth $9 Given New Guidance, $12 if Turnaround Succeeds

Nokia (NYSE:NOK) announced Tuesday that the company’s 2011 quarterly sales and margin targets in the mobile phone business are no longer valid. Nokia attributed this revised forecast to a mix of competitive pressures impacting margins and market share as well as some mismanagement in the company’s China business. The company has been facing challenges from Apple’s (NASDAQ:AAPL) iPhone, Google’s (NASDAQ:GOOG) Android phones as well as low-cost feature phone competition in emerging markets.

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Strong Auto Sales Drive Sirius XM Subs Growth

Sirius XM (NASDAQ:SIRI) Q1 2011 results impressed with its total subscribers to date reaching a new high of 20.6 million, up 9% from a year ago. Its adjusted EBITDA was $181 million, up 15% year-over-year. Management attributed the subscriber growth to the rebound in the auto industry. For U.S. automakers both Ford (NYSE:F) and GM (NYSE:GM) have reported encouraging earnings. Despite the problems for the OEM supply chain caused by Japan’s earthquake, the firm expects to increase net new subscribers by 1.4 million for 2011.  ^[2] Sirius competes with traditional AM/FM radio as well as Internet radio offerings from Pandora and Rhapsody.

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EMC’s Focus on Unified Storage a Concern for NetApp

EMC (NYSE:EMC), the leading storage vendor in the world, has expanded its product line to unified storage with its newly launched VNX storage platform. This comes as a competitive product offering against rival NetApp (NASDAQ:NTAP), the dominant player in the unified storage market and the third largest player in external disk storage market. ^[3] Data storage is among the fastest growing industries today and has witnessed tremendous amount of activity over the past year and a half – including a number of high profile acquisitions and an increased focus on the sector from tech giants like HP (NYSE:HPQ), Dell (NASDAQ:DELL) & IBM (NYSE:IBM) that are shifting to more cloud services.

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1. Shutterfly completes Tiny Prints acquisition, Yahoo Finance, April 25 2011 [↩]
2. SiriusXM Reports First Quarter 2011 Results, May 3, 2011 [↩]
3. Worldwide Disk Storage Systems Finishes 2010 with Double-Digit Growth, IDC [↩]