From the InternetStockBlog, a note about Blue Nile’s earnings, an echo of the FTD call last year.
Blue Nile reported a surprisingly weak 4Q05, in our view, blaming both weak jewelry industry fundamentals and what CEO Mark Vadon called irrational pricing in the pay per click advertising market (although we will continue to believe he said “eRational”). On the conference call, Mr. Vadon stated, “We saw extremely aggressive increases in the cost of online advertising. Our cost per click on Google for example, rose by over 50% from a year earlier. While the cost of online marketing grew significantly in Q4, we remain disciplined in our spending, in order to maintain profitability on new customers rather than to chase unprofitable growth, as some of our competitors have done.”