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Blue Nile shares fall on weak 4Q results

NEW YORK (AP) -- Shares of Blue Nile Inc. tumbled Wednesday after the online diamond and jewelry seller announced a lower-than-expected fourth-quarter profit and issued a weak earnings forecast for the full year.

THE SPARK: For the quarter ended Dec. 30, Seattle-based Blue Nile earned $4.9 million, or 39 cents per share. Analysts polled by FactSet expected 46 cents per share. Revenue rose 21 percent to $136.1 million, below average predictions of $144.9 million.

While the company issued a better-than-expected profit outlook for the current quarter, it full-year earnings prediction of 75 cents to 85 cents per share and revenue guidance of $400 million to $470 million fell short of average analysts' predictions of a profit of 95 cents per share and $456.6 million in revenue.

THE BIG PICTURE: Blue Nile said its holiday season sales of non-engagement jewelry were lower than expected, partially as a result of weaker consumer spending on discretionary items.

For the overall quarter, U.S. sales of engagement jewelry surged 31 percent to $73.6 million, while U.S. sales of non-engagement jewelry rose just 5 percent to $42.5 million. International sales jumped 27 percent to $20 million.

THE ANALYSIS: Janney Capital Markets analyst Shawn Milne backed his "Neutral" rating for Blue Nile, saying that while its focus on boosting profitability and sales of non-engagement jewelry is fine, he remains concerned about the company's growth predictions for this year because it will face tougher profit and sales comparisons.

THE SHARES: Down $1.12 or 4 percent, to $29.85 in afternoon trading, after dropping as low as $28.90 earlier in the day. Over the past 52 weeks, the company's shares have traded between $22.94 and $43.71.

Over the past year, the shares lost about 28 percent of their value.