Blue Nile Shares Surge Despite Lackluster Outlook

Shares of Blue Nile

surged almost 10% in early trading after reporting Q3 earnings. Blue Nile reported 3Q10 results which fell short of expectations, with net revenue of $67 million, up 1% y/y, below consensus of $72 million. Adjusted EBITDA of $6.6 million, up 4% y/y, matched our estimate. EPS of $0.19, up $0.02 y/y, was $0.01 ahead of consensus. Management provided 4Q10 revenue guidance of $106-$115 million, or 3-12% y/y growth, implying total FY10 revenue of $324-333 million, slightly below management's previously downwardly revised estimate of $325-$335 million. EPS was guided in a range of $0.41-$0.46, implying a full-year guidance range of $0.94-$0.99, essentially matching prior guidance of $0.94-$1.00 and slightly ahead of prior consensus at $0.95. NILE is trading higher at $49.86