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Another Hooray for eBay

Online auction leader eBay beat Wall Street's expectations Thursday, reporting after the bell that its third-quarter earnings were $61 million, or 21 cents a share, on net revenues of $288.8 million.

Equally important, the San Jose, Calif.-based company said that for the fourth quarter it expects to see sales of $372 million to $381 million, including results from PayPal, its newly acquired online payments service. It estimates fourth quarter GAAP earnings per diluted share could range between 19 and 20 cents.

Analysts polled by Thomson/First Call on average had expected eBay's third-quarter earnings to come in at about 20 cents a share, up from 12 cents share in the same period a year earlier.

eBay said it saw 52 percent year-over-year transaction revenue growth in the United States and 163 percent year-over-year transaction growth internationally. Third-quarter net revenues increased 49 percent over the $194.4 million generated in the same period a year ago.

Nearly 37,000 sellers on eBay.com and 14,000 sellers internationally are now operating storefronts on eBay Stores, the company said.

"Our success results from our thriving community of users -- buyers looking for practically everything and sellers using eBay to build their businesses," said Meg Whitman, president and CEO of eBay.

eBay hosted a record 160 million listings during the quarter, representing a 47 percent year-over-year increase from the 109 million reported a year ago.

PayPal users generated $1.79 billion in Total Payment Volume during the third period, representing a 93 percent increase from the $925 million generated a year ago. PayPal net revenues totaled $59.3 million, up 98 percent. Beginning with fourth quarter financial results, eBay said, it will report the combined operations of PayPal and Billpoint in a separate Payments segment. And as expected, eBay expects to complete the phase-out of PayPal's gaming business during the fourth quarter.

For the full year 2002, eBay expects that consolidated net revenues could range between $1.172 billion and $1.181 billion, reflecting $60 million to $64 million of incremental PayPal revenues and $1.112 billion to $1.117 billion from the core eBay business.

On the bottom line, eBay expects that pro forma earnings per diluted share could range between 81 and 82 cents, representing a 4- to 5-cent increase from the company's most recent guidance. On a GAAP basis, the company expects that earnings per diluted share could range between 76 and 77 cents.

For 2003, eBay said it expects consolidated net revenues could range between $1.77 billion and $1.83 billion, with GAAP earnings per share ranging between $1.02 and $1.05.

eBay has a "strong business model, they're growing revenue consistently and the company has not made a misstep," an analyst at Legg Mason Wood Walker was quoted as saying earlier in the day.

eBay Motors alone "is a $3.8 billion business on an annualized basis," Whitman said at the conference call. eBay's second-quarter earnings were $54.3 million, or 19 cents per share.