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<SEC-DOCUMENT>0000891020-06-000410.txt : 20070228
<SEC-HEADER>0000891020-06-000410.hdr.sgml : 20070228
<ACCEPTANCE-DATETIME>20061215154705
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000891020-06-000410
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20061215

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BLUE NILE INC
		CENTRAL INDEX KEY:			0001091171
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-JEWELRY STORES [5944]
		IRS NUMBER:				911963165
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		705 FIFTH AVE S
		STREET 2:		STE 900
		CITY:			SEATTLE
		STATE:			WA
		ZIP:			98104
		BUSINESS PHONE:		2063366700

	MAIL ADDRESS:	
		STREET 1:		705 FIFTH AVE S
		STREET 2:		STE 900
		CITY:			SEATTLE
		STATE:			WA
		ZIP:			98104

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	INTERNET DIAMONDS INC
		DATE OF NAME CHANGE:	20000131
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
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<HEAD>
<TITLE>corresp</TITLE>
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<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>&#091;Blue Nile, Inc. Letterhead&#093;</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">&#091;Via EDGAR and Federal Express&#093;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">December&nbsp;15, 2006

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;William Choi<BR>
Branch Chief<BR>
Securities and Exchange Commission<BR>
Division of Corporation Finance<BR>
100 F Street, N.W.<BR>
Mail Stop: 3561<BR>
Washington, D.C. 20549

</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Re:</B></TD>
    <TD>&nbsp;</TD>
    <TD><B>Blue Nile, Inc. (File No.&nbsp;000-50763)</B><br>
<B>Form&nbsp;10-K for the Fiscal Year Ended January&nbsp;1, 2006</B><BR>
<B>Form&nbsp;10-Q for the Quarterly Period Ended October&nbsp;1, 2006</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Mr.&nbsp;Choi:

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On behalf of Blue Nile, Inc. (the &#147;<B><I>Company</I></B>&#148;), this letter is being transmitted in response to
comments (the &#147;<B><I>Comments</I></B>&#148;) received from the staff (the &#147;<B><I>Staff</I></B>&#148;) of the Securities and Exchange
Commission (the &#147;<B><I>Commission</I></B>&#148;), by letter dated December&nbsp;8, 2006, with respect to (i)&nbsp;the Annual
Report on Form 10-K for the fiscal year ended January&nbsp;1, 2006, filed by the Company with the
Commission on March&nbsp;15, 2006 and (ii)&nbsp;the Quarterly Report on Form 10-Q for the quarterly period
ended October&nbsp;1, 2006, filed by the Company with the Commission on November&nbsp;13, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The numbering of the paragraphs below corresponds to the numbering of the Comments, which, for the
Staff&#146;s convenience, have been incorporated into this response letter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Form&nbsp;10-K for the Fiscal Year Ended January&nbsp;1, 2006 </B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Controls and Procedures, page 54</I></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Disclosure Controls and Procedures, page 54</I></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Your disclosures indicate that you believe a control system can only provide reasonable, not
absolute, assurance that the objectives of the controls system are met. In future filings,
please revise your conclusion that your disclosure controls and procedures were effective to
reflect, if true, that the disclosure controls and procedures were effective at the
&#147;reasonable assurance&#148; level. Please refer to Part&nbsp;II.F.4 of SEC Release No.&nbsp;33-8238 for
guidance.</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In future filings, the Company will present its conclusion, if true, that its disclosure
controls and procedures were effective at the &#147;reasonable assurance&#148; level.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">December&nbsp;15, 2006<BR>
Page 2

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Form&nbsp;10-Q for the Quarterly Period Ended October&nbsp;1, 2006 </B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Notes to Consolidated Financial Statements</I></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Note 1. Description of the Company and Summary of Significant Accounting Policies</I></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Stock-Based Compensation, page 9</I></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>We note that you adopted SFAS No.&nbsp;123(R) on January&nbsp;2, 2006. Please revise future filings to
disclose the effect of the change from applying the intrinsic value method on operating
income, income before income taxes, net income, cash flow from operations, cash flow from
financing activities, and basic and diluted earnings per share. Refer to paragraph 84 of SFAS
No.&nbsp;123(R). Please also clearly identify the amount of stock-based compensation that you
recognized during the periods presented specifically related to your transition to accounting
for employee stock-based compensation at fair value using the modified prospective method in
your discussions of the results of operations in Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations. Please also disclose the total fair value of
shares vested during the year as required by paragraph A240.(c.)(2) of SFAS No.&nbsp;123(R).</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In future filings, the Company will disclose the effect of the accounting policy change
from applying the intrinsic value method on operating income, income before income taxes,
net income, cash flow from operations, cash flow from financing activities, and basic and
diluted earnings per share.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In future filings, the Company will identify the amount of stock-based compensation that
it recognized during the periods presented specifically related to its transition to
accounting for employee stock-based compensation at fair value using the modified
prospective method in its discussions of the results of operations in Management&#146;s
Discussion and Analysis of Financial Condition and Results of Operations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In future filings, the Company will disclose the total fair value of shares vested during
the applicable year.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Controls and Procedures, page 19</I></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Evaluation of Disclosure Controls and Procedures, page 19</I></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>We note your disclosure that you designed your disclosure controls and procedures to ensure
that information required to be disclosed in your filing is recorded, processed, summarized,
and reported within the time periods specified in the SEC&#146;s rules and forms. Please confirm
to us, if true, and revise your disclosure to indicate that you design your disclosure
controls and procedures to also ensure that information required to be disclosed in the
reports that you file or submit under the Exchange Act is
accumulated and communicated to management, including, your principal executive and
financial officers, to allow timely decisions regarding required disclosure. Refer to
Exchange Act Rule&nbsp;13a-</I><I>15(e)</I><I>.</I></TD>
</TR>


</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">December&nbsp;15, 2006<BR>
Page 3

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company confirms and will revise its disclosure in future filings to indicate that it
designs its disclosure controls and procedures to ensure that information required to be
disclosed in the reports that it files or submits under the Exchange Act is accumulated
and communicated to management, including its principal executive and financial officers,
to allow timely decisions regarding required disclosure.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">* * * * *
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company further acknowledges that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company is responsible for the adequacy and accuracy of the disclosure in the
filings;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>staff comments or changes to disclosure in response to Staff comments do not foreclose
the Commission from taking any action with respect to the filings; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company may not assert Staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please do not hesitate to call me at (206)&nbsp;336-6785, or John Geschke at (650)&nbsp;843-5757, if you have
any questions or would like any additional information regarding these matters.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Sincerely,
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-variant: SMALL-CAPS">/s/ Diane M. Irvine</FONT>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Diane M. Irvine<BR>
Chief Financial Officer<BR>
Blue Nile, Inc.

</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">cc:</TD>
    <TD>&nbsp;</TD>
    <TD>Lauren Neiswender, General Counsel, Blue Nile, Inc.<br>
John Geschke, Cooley Godward Kronish LLP<br>
Scott Ruggiero, Staff Accountant, Securities and Exchange Commission<br>
Andrew Blume, Securities and Exchange Commission</TD>
</TR>
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>


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