Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of online photo publisher Shutterfly (NAS: SFLY) surged 19% on Friday after announcing an initial offer to buy bankrupt Eastman Kodak's online-picture business for $23.8 million.

So what: With the deal, Shutterfly would basically remove a large competitor from the online-photo sharing space, strengthen its leadership position, and likely lead to lower costs over time. The transfer of Kodak Gallery's 75 million customer accounts could even help Shutterfly thwart tech threats like Apple and Amazon from entering the fray.  

Now what: If Shutterfly can close the deal, analysts estimate that its annual earnings could increase by at least 10 cents per share. But while Shutterfly is certainly the likely buyer at this point, rivals like Snapfish and Vistaprint still have the opportunity to bid for Kodak Gallery in a court-supervised auction. Given Shutterfly's already-lofty price multiples, the risk/reward trade-off seems rather unfavorable.

Interested in more info on Shutterfly? Add it to your watchlist.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Apple, Amazon, and Vistaprint. Motley Fool newsletter services have recommended buying shares of Apple, Amazon, and Vistaprint, as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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