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Greenberg: Vistaprint is Busted Growth Story

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Question Marks

Vistaprint is getting clobbered today and investors appear to be justified in doling out such serious punishment.

The reason: Two weeks before the quarter ended they were led to expect something very different.

Vistaprint provides marketing products and services to what it calls "micro" businesses; about 45 percent of its business is outside the U.S.

On June 15, with just two weeks to go before the quarter's end, the Dutch company's management appeared at a William Blair conference and told a very positive story. Said CEO Robert Keane, "We are confident that the next fiscal year will continue [with] annual GAAP ESP growth rates of approximately 20 percent or more."

The next day William Blair analyst Jack Murphy reiterated the positive view and noted that investors shouldn't worry about any currency impact because "most expenses in European markets are denominate din euros, which create a natural hedge and mitigates the bottom line effects."

Enter earnings yesterdayand—OOPS.

The company missed on the fourth quarter and guided below expectations for next year, with 2011 EPS now forecast to grow by 16 percent—and that's the middle of the forecasted range.

According to CFO Mike Giannetto: "We currently expect currency exhcnage rates to negatively impact our reported revenue and earnings growth in 2011, and we are cautious about our near-term outlook."

In a prepared text, management also said it has identified "operational issues" but that they're merely "growing pains."

Operational issues? Growing pains?

My take: When supposed growth companies get it wrong two weeks before the end of the quarter, and suddenly discover operational issues and discuss growing pains, you can't help but wonder what is coming next.

One thing is for certain: For now, this is a busted growth story.

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